Types of Trust Accounts – Pooled Trust Accounts

Pooled Trust Accounts

You must deposit all trust funds that you receive into a pooled trust account (Rule 1504) within three business days.

Trust funds, regardless of their form or of client instructions, may not be paid or transferred to anyone else or into any other account, including a SIBA, until they have been deposited to your pooled trust account.

Pooled trust accounts must be held at a financial institution in Saskatchewan insured by the CDIC or CUDGC (Rule 1505(1)). Before opening a trust account you must receive approval from the Law Society. In order to obtain approval you must submit a Firm Registration Form (Rule 902). If approved the Law Society will notify you and will provide you with an Opening a New Trust Account – Checklist to take to the financial institution when setting up your trust account to ensure that all requirements are met. In particular, you must instruct the financial institution to forward all the interest earned on the pooled trust account to the Law Foundation (Rule 1505(2)).


Practice Tip

Give yourself some lead-time to obtain approval and get the trust account set up properly before you expect to use your pooled trust account for the first transaction. It’s not as simple as opening a bank account and issuing a trust cheque that same morning. In addition to the checklist that you must give to the financial institution, you must set up records and client trust ledgers in advance.

If it is the first time you are opening a pooled trust account, or if you have any questions, contact the Law Society. 

Pursuant to Rule 1505, all pooled trust accounts must:

  • be kept in your firm’s name;
  • be designated as a “trust” containing funds of more than one client, and the word “trust” must appear on your records, the financial institution’s records and all trust cheques;
  • be readily available for you to draw on;
  • provide you monthly with cancelled cheques and bank statements. (Some financial institutions now store cancelled cheques at a data centre and this, on its own, is not sufficient. You must instruct the institution to return cancelled cheques, or acceptable electronic versions of the front and back of the cheques, to you);
  • hold only up to $300 of your own money to cover service fees/charges (Rule 1505(4));
  • remain in a positive balance. If a shortfall occurs you must eliminate the shortage with funds from the general account and report any shortages exceeding $1,000 to the Law Society within 3 business days (Rule 1526).


Practice Tip

It is a good idea to leave a small amount of your money in your trust account because Rule 1512 lists the only acceptable withdrawals from trust, and bank charges are not one of them—yet accidents do happen! You should instruct the institution to take all bank charges for the pooled account from your general account and use the $300 only as a fallback.


CDIC Annual Reporting Requirements

For every pooled account you hold with the financial institution (with the exception of pooled accounts held at a Credit Union), you must file with that institution an annual report by May 30th of each year for the balances held as of April 30th (Rule 1531 and Canada Deposit Insurance Corporation Act, in particular it’s Schedule). This is so that each of your client’s funds (and not just the pooled account itself) is insured up to the $100,000 limit of CDIC insurance.

Click here to view more information about CDIC Annual Reporting Requirements.

You can find a Sample Report to Financial institutions re CDIC here.

If you have deposited funds in a pooled trust account in expectation of an early payout, you should consider seeking your client’s instructions to open a separate trust account if the payout is delayed. There have been claims against lawyers for failing to recommend a separate trust account in appropriate circumstances.


Separate Interest-Bearing Trust Accounts (“SIBAs”)

Your client can instruct you (in writing is best) to place his or her funds into a SIBA – an interest-bearing account where funds are held in trust for a specific client. Your client is entitled to the interest made on money held in a SIBA (LPA, s. 78(7)).

A SIBA must be a savings account, term deposit, guaranteed investment certificate or Government of Canada Treasury Bill and must be held at a financial institution (Rule 1501).

Don’t forget that you must first deposit trust money into a pooled trust account before you can transfer it to a SIBA! See Rule 1507.

To ensure the return will outweigh the cost of setting up a separate account, consider:

  • the amount of the deposit,
  • the time you expect to hold it, and
  • the applicable interest rate.

If the net return does not warrant the expense of setting up a separate account, advise your client and seek contrary instructions.

Rule 1507 provides that all SIBAs must:

  • include a reference to the specific client on the bank’s records and the firm’s records;
  • be insured by CDIC or CUDGC, unless otherwise directed by your client in writing; and
  • exclusively hold trust funds, except as required to make up a shortfall under Rule 1526.