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Simple English definitions for legal terms
trust account
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A quick definition of trust account:
A trust account is a special bank account that a lawyer uses to hold money that belongs to their client. This could be money from a settlement or money that the client gave to the lawyer to use later in a business transaction. The account usually earns interest and is sometimes called a client trust account.
A more thorough explanation:
A trust account, also known as a client trust account, is a type of bank account that a lawyer uses to hold money belonging to a client. This money may come from a variety of sources, such as a settlement in a client's case or money received from a client's debtor. The account is usually interest-bearing, which means that the money in the account can earn interest over time.
For example, if a lawyer settles a case for a client and receives a settlement check, the lawyer would deposit the money into the client trust account. The lawyer would then use the money to pay any outstanding bills or fees related to the case before distributing the remaining funds to the client.
Another example would be if a client gives a lawyer money to hold for a future business transaction. The lawyer would deposit the money into the trust account and hold it until the transaction takes place.
These examples illustrate how a trust account is used to protect a client's money and ensure that it is used appropriately by the lawyer.