Books, Records and Accounts
Members should ensure they are familiar with the Division 16 of the rules on books, records and accounts.
Financial Year End
If you are an active member in private practice and resident in Yukon, you are required to notify the Executive Director of the date of your financial year-end as soon as practicable after going into private practice.
If you are an active member in private practice and non-resident in Yukon, but maintain a trust account in Yukon, you must notify the Executive Director of your financial year-end as soon as practicable after opening the trust account.
If the date of your financial year-end changes or you are no longer an active member in private practice, you must advise the Executive Director within 30 days after the change.
Each year active members in private practice who are resident in Yukon must file a certification in Form 18 within six months of their financial year-end.
Non-resident members in active practice who have a trust account in Yukon must also file a certification in Form 18 within six months of their financial year-end.
Under subrule 166(3), failure to file a Form 18 as required will result in automatic suspension from the Law Society until the form has been filed and you are notified in writing that the suspension is lifted unless an extension was granted under subrule 166(4).
Trust accounts are an important privilege and responsibility. They are essential to the conduct of all types of business, including the sale of property, the handling of estates and the settlement of court cases.
The Law Society has strict requirements for lawyers with trust accounts to follow in keeping books and records for their trust accounts.
You should ensure you fully understand the requirements in Division 16 so you are in compliance with the rules. If you have questions about setting up your trust account and/or the rule requirements for maintaining a trust account, please contact the Law Society office.
Only trust money, which is money directly related to legal services that you or your firm is providing, may be deposited into a trust account.
If you open a trust account, you are required under rule 165 to notify the Executive Director in writing as soon as practicable that the account has been opened.
Under rule 160(1) you must also send a letter of direction to the financial institution with the following instructions:
- The trust account is to be interest-bearing and the interest paid on the account is to be remitted to the Yukon Law Foundation (“Foundation”);
- The rate and manner of calculating interest, and any service charges or other fees to be deducted from the interest payable to the Foundation will be agreed to by the financial institution and the Foundation;
- The financial institution is to provide you with trust account statements;
- The account is to be designated as a ‘trust’ account in the records of the financial institution;
- The financial institution is authorized to provide information requested by the Foundation to verify the interest paid has been properly calculated.
A copy of the letter of direction to the financial institution must also be sent to the Society and the Foundation.
Trust Account Report – Form 19
If you have a trust account in Yukon at any time during your financial year, you must file a trust account report in Form 19 within six months after your financial year-end.
If you are an employee of a firm/partnership that maintains a trust account in Yukon who will be filing a Form 19, you do not need to complete a Form 19.
Form 19 has two parts. The first part must be completed by the member/firm and signed by the member or members with signing authority on behalf of the firm/partnership. The second part must be completed and signed by a chartered professional accountant. Both parts must be submitted together.
Under subrule 166(3), failure to file a Form 19 as required will result in automatic suspension from the Law Society until the form has been filed and you are notified in writing that the suspension is lifted unless an extension was granted under subrule 166(4).
As both a Form 18 and 19 are required within six months after your financial year-end, both forms can be filed together.
Unclaimed Trust funds
Under s. 114(1)(a) of the Legal Profession Act, 2017, if you are unable to locate the owner of the money in your trust account or any other property you hold in trust for two years, you can apply to the Executive for permission to pay the money or deliver the property to the Yukon Law Foundation.
In deciding whether to grant permission under s.114(1)(a) of the Act, the Executive will have regard to:
- The nature of the trust and the circumstances in which it arose;
- Whether you have made a reasonable effort to locate the owner; and
- Whether there is a reasonable prospect that you will be able to locate the owner.
If you make an application for permission to pay money or property held in trust to the Yukon Law Foundation, please ensure you provide details of all efforts you made to locate the owner and state why you believe there is no reasonable prospect that you will be able to locate the owner.
Under s. 114(4)(c) of the Act, you must pay or deliver to the Yukon Law Foundation any money in your trust account or other property you hold in trust for seven years to the Yukon Law Foundation unless you obtain permission from the Executive under s.114(1)(b) of the Act to hold the money or property for longer.
Retention of Records
Subrule 163(6)(c) of the rules requires that books, records and accounts be kept in paper form, or in an electronic or machine-readable form from which a paper copy can be readily produced, for at least six years following your most recent financial year-end.
In meeting its mandate to uphold and protect the public’s interest in the delivery of legal services the Audit Committee of the Law Society of Yukon retains an independent auditor to audit a select number of member’s trust accounts each year. Audits are not limited to only members with trust accounts.
Selection is based on a number of factors including whether the member recently opened a trust account, when the member was last audited, areas of practice and/or whether the Trust Account Report indicates non-compliance with the rules.
If you have any questions with respect to books, records and accounts, or opening or closing your practice, please contact the Law Society Office for guidance.