Record Keeping Requirements
Records needed to reconstruct trust activity by account, client, matter, transaction, and source document.
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Trust-accounting and IOLTA questions, answered only from official sources with citations. Not legal advice.
Definition
Trust recordkeeping is the set of journals, ledgers, statements, reconciliations, and supporting documents that prove client funds were received, held, and disbursed correctly.
Typical Scope
- Bank statements and cancelled checks or images.
- Trust account journal or check register.
- Client and matter ledgers.
- Deposit slips, wire confirmations, invoices, and settlement statements.
- Monthly or periodic reconciliation workpapers.
Operational Rules
- Keep a complete transaction trail
- Each transaction should show date, amount, payor/payee, client or matter, purpose, and supporting document.
- Perform three-way reconciliation
- Compare bank statement balance, trust account journal, and total client ledger balances.
- Retain records for the required period
- Retention periods vary by jurisdiction and should be stated directly on each state page.
Examples
A trust check clears but no matter ledger entry exists.
Treat as an exception requiring investigation and correction documentation.
A bank fee is posted directly by the bank.
Record it in the trust journal and allocate it according to the local rule and firm policy.
Review Checklist
Attach source documents to deposits and disbursements.
Reconcile on a fixed schedule.
Preserve correction history instead of overwriting entries silently.
Review stale balances and unmatched bank transactions.
FAQ
What is trust account recordkeeping?
Trust account recordkeeping is the set of bank records, journals, ledgers, reconciliations, and supporting documents that explain every trust transaction.
What is three-way reconciliation?
Three-way reconciliation compares the bank statement balance, trust account journal, and total client ledger balances.
What exactly is a three-way reconciliation?
It is confirming, on a regular schedule, that three figures agree: the bank statement balance, your trust account journal, and the sum of all individual client ledger balances. When they do not match, investigate before the discrepancy compounds.
How long must I keep trust account records?
Records must be retained for a set period after the representation ends, but the exact retention period varies by jurisdiction — check your state’s page for its specific requirement.