Current through Register Vol. 39, No. 6, September 16, 2024
(a) Check
Format. All general trust accounts, dedicated trust accounts, and fiduciary
accounts must use business-size checks that contain an Auxiliary On-Us field in
the MICR line of the check.
(b)
Minimum Records for Accounts at Banks. The minimum records required for general
trust accounts, dedicated trust accounts, and fiduciary accounts maintained at
a bank shall consist of the following:
(1) all
records listing the source and date of receipt of any funds deposited in the
account including, but not limited to, bank receipts, deposit slips and wire
and electronic transfer confirmations, and, in the case of a general trust
account, all records also listing the name of the client or other person to
whom the funds belong;
(2) all
canceled checks or other items drawn on the account, or digital images thereof
furnished by the bank, showing the amount, date, and recipient of the
disbursement, and, in the case of a general trust account, the client name,
file number, or other identifying information of the client from whose balance
each item is drawn, provided, that:
(A)
digital images must be legible reproductions of the front and back of the
original items with no more than six images per page and no images smaller than
1-3/16 x 3 inches; and
(B) the bank
must maintain, for at least six years, the capacity to reproduce electronically
additional or enlarged images of the original items or records related thereto
upon request within a reasonable time.
(3) all instructions or authorizations to
transfer, disburse, or withdraw funds from the trust account (including
electronic transfers or debits), or a written or electronic record of any such
transfer, disbursement, or withdrawal showing the amount, date, and recipient
of the transfer or disbursement, and, in the case of a general trust account,
also showing the name of the client or other person to whom the funds
belong;
(4) all bank statements and
other documents received from the bank with respect to the trust account,
including, but not limited to notices of return or dishonor of any item drawn
on the account against insufficient funds;
(5) in the case of a general trust account, a
ledger containing a record of receipts and disbursements for each person or
entity from whom and for whom funds are received and showing the current
balance of funds held in the trust account for each such person or entity;
and
(6) any other records required
by law to be maintained for the trust account.
(c) Minimum Records for Accounts at Other
Financial Institutions. The minimum records required for dedicated trust
accounts and fiduciary accounts at financial institutions other than a bank
shall consist of the following:
(1) all
records listing the source and date of receipt of all funds deposited in the
account including, but not limited to, depository receipts, deposit slips, and
wire and electronic transfer confirmations;
(2) a copy of all checks or other items drawn
on the account, or digital images thereof furnished by the depository, showing
the amount, date, and recipient of the disbursement, provided, that the images
satisfy the requirements set forth in Rule 1.15-3(b)(2);
(3) all instructions or authorizations to
transfer, disburse, or withdraw funds from the account (including electronic
transfers or debits) or a written or electronic record of any such transfer,
disbursement, or withdrawal showing the amount, date, and recipient of the
transfer or disbursement;
(4) all
statements and other documents received from the depository with respect to the
account, including, but not limited to notices of return or dishonor of any
item drawn on the account for insufficient funds; and
(5) any other records required by law to be
maintained for the account.
(d) Reconciliations of General Trust
Accounts.
(1) Quarterly Reconciliations. For
each general trust account, a reconciliation report shall be prepared at least
quarterly. Each reconciliation report shall show all of the following balances
and verify that they are identical:
(A) The
balance that appears in the general ledger as of the reporting date;
(B) The total of all subsidiary ledger
balances in the general trust account, determined by listing and totaling the
positive balances in the individual client ledgers and the administrative
ledger maintained for servicing the account, as of the reporting date;
and
(C) The adjusted bank balance,
determined by adding outstanding deposits and other credits to the ending
balance in the monthly bank statement and subtracting outstanding checks and
other deductions from the balance in the monthly statement.
(2) Monthly Reconciliations. Each
month, the balance of the trust account as shown on the lawyer's records shall
be reconciled with the current bank statement balance for the trust
account.
(3) The lawyer shall
review, sign, date, and retain a copy of the reconciliations of the general
trust account for a period of six years in accordance with Rule
1.15-3(g).
(e)
Accountings for Trust Funds. The lawyer shall render to the client a written
accounting of the receipts and disbursements of all trust funds (i) upon the
complete disbursement of the trust funds, (ii) at such other times as may be
reasonably requested by the client, and (iii) at least annually if the funds
are retained for a period of more than one year.
(f) Accountings for Fiduciary Property.
Inventories and accountings of fiduciary funds and other entrusted property
received in connection with professional fiduciary services shall be rendered
to judicial officials or other persons as required by law. If an annual or more
frequent accounting is not required by law, a written accounting of all
transactions concerning the fiduciary funds and other entrusted property shall
be rendered to the beneficial owners, or their representatives, at least
annually and upon the termination of the lawyer's professional fiduciary
services.
(g) Minimum Record
Keeping Period. A lawyer shall maintain, in accordance with this Rule 1.15,
complete and accurate records of all entrusted property received by the lawyer,
which records shall be maintained for at least the six (6) year period
immediately preceding the lawyer's most recent fiscal year end.
(h) Audit by State Bar. The financial records
required by this Rule 1.15 shall be subject to audit for cause and to random
audit by the North Carolina State Bar; and such records shall be produced for
inspection and copying in North Carolina upon request by the State
Bar.
(i) Reviews.
(1) Each month, for each general trust
account, dedicated trust account, and fiduciary account, the lawyer shall
review the bank statement and cancelled checks for the month covered by the
bank statement.
(2) Each quarter,
for each general trust account and dedicated trust account, the lawyer shall
review the statement of costs and receipts, client ledger, and cancelled checks
of a random sample of representative transactions completed during the quarter
to verify that the disbursements were properly made. The transactions reviewed
must involve multiple disbursements unless no such transactions are processed
through the account, in which case a single disbursement is considered a
transaction for the purpose of this paragraph. A sample of three representative
transactions shall satisfy this requirement, but a larger sample may be
advisable.
(3) Each quarter, for
each fiduciary account, the lawyer shall engage in a review as described in
Rule 1.15-3(i)(2); however, if the lawyer manages more than ten fiduciary
accounts, the lawyer may perform reviews on a random sample of at least ten
fiduciary accounts in lieu of performing reviews on all such
accounts.
(4) The lawyer shall take
the necessary steps to investigate, identify, and resolve within ten days any
discrepancies discovered during the monthly and quarterly reviews.
(5) A report of each monthly and quarterly
review, including a description of the review, the transactions sampled, and
any remedial action taken, shall be prepared. The lawyer shall sign, date, and
retain a copy of the report and associated documentation for a period of six
years in accordance with Rule 1.15-3(g).
(j) Retention of Records in Electronic
Format. Records required by Rule 1.15-3 may be created, updated, and maintained
electronically, provided:
(1) the records
otherwise comply with Rule 1.15-3, to wit: electronically created
reconciliations and reviews that are not printed must be reviewed by the lawyer
and electronically signed using a "digital signature" as defined in
21 CFR
11.3(b)(5);
(2) printed and electronic copies of the
records in industry-standard formats can be made on demand; and
(3) the records are regularly backed up by an
appropriate storage device.
Authority
G.S.
84-23;
Adopted by the Supreme
Court: July 24, 1997;
Amendments Approved by the Supreme Court:
March 1, 2003; October 6, 2004; March 6, 2008; June 9, 2016; April 5,
2018.
