Trust Interest Maximisation

Trust Interest Maximisation

The Fund  actively engages with legal practitioners so as to encourage firms to invest section 86(3) funds, which are not immediately required for any particular purpose, into an interest-bearing account in terms of section 86(3) so as to benefit from a higher rate of interest.

  • Generally speaking, the rate of interest earned on a section 86(3) interest – bearing account can be up to 45% higher than the rate of interest earned on a section 86(2) trust bank account.
  • Trust account practices are urged to engage with their Banks and invest money, not immediately required for any particular purpose, from their trust accounts into an interest-bearing account in terms of section 86(3).
  • Benefits of investing surplus funds terms in section 86(3)
    • Increased trust income possibly leading to:
      • Increased refund of recoverable bank charges
      • Increased refund of audit fees
  • The Fund’s trust interest income will increase, and this will assist the Fund in carrying out its mandate in terms of the Legal Practice Act
  • The Fund exists to support consumers of legal services as well as legal practitioners by protecting the consumers of legal services against loss resulting from misappropriation of trust money or property entrusted to trust account practices in the course of their practices
  • The Fund is required to financially support legal regulation and may, in the case of legal education in the country, also support such, and we continue to do so in the interests of both the public and the legal profession

PAYMENT OF TRUST ACCOUNT INTEREST ACCRUED ON SECTION 86 TRUST ACCOUNTS

The remaining Chapters of the Legal Practice Act, No. 28 of 2014 (LPA) came into effect
on 1 November 2018, and the Legal Practitioners and all relevant stakeholders are
reminded about the requirements of section 87(4)(a), which make it mandatory for
Legal Practitioners to pay any unclaimed and unknown monies held in a trust account
to the Legal Practitioners’ Fidelity Fund (LPFF).
Section 87(4)(a) and (b) of the LPA states that:
a) Any money held in the trust account of a trust account practice in respect of
which the identity of the owner is unknown, or which is unclaimed after one year,
must, after the second annual closing of the accounting records of the trust
account practice following the date upon which those funds were deposited in
the trust account of the trust account practice, be paid over to the Fund by the
trust account practice.
b) Nothing in this subsection deprives the owner of the money contemplated in
paragraph (a) of the right to claim from the Fund any portion as he or she may
prove an entitlement to.

PAYMENT OF UNCLAIMED AND UNKNOWN TRUST MONIES IN TERMS OF SECTION 87(4) OF THE LPA

The remaining Chapters of the Legal Practice Act, No. 28 of 2014 (LPA) came into effect on 1 November 2018, and the Legal Practitioners and all relevant stakeholders are reminded about the requirements of section 87(4)(a), which make it mandatory for Legal Practitioners to pay any unclaimed and unknown monies held in a trust account to the Legal Practitioners’ Fidelity Fund (LPFF).