Question

Which one of the following statements is correct?

Select one:
O a. Trust money may be used to pay for the legal practice's expenses when the expenses relate directly to the running of the legal
practice.
O b. The money in the trust investment accounts remains trust money and should, together with the other trust assets, be at least
equal to the trust liabilities.
O c. When the trust funds that are deposited with the legal practice are going to be invested in an interest-bearing trust investment
account then the funds can be deposited directly into the trust investment account.
O d. Any surplus trust money deposited into the trust banking account of an attorney, which is not needed immediately for a specific
purpose, must be invested in a separate trust interest-bearing account

Answer 1

Option B is correct: The money in the trust investment accounts remains trust money and should be equal to the trust liabilities.

Step-by-step explanation:

The correct statement is option B: The money in the trust investment accounts remains trust money and should, together with the other trust assets, be at least equal to the trust liabilities.

Trust money refers to funds entrusted to a legal practice for specific purposes, such as paying clients' expenses or holding client funds. It must be kept separate from the firm's own funds and accounted for properly. The money in the trust investment accounts is part of the trust assets, and its value should be sufficient to cover the trust liabilities.

For example, if a legal practice holds $100,000 in trust investment accounts and has $80,000 in trust liabilities, the funds in the trust investment accounts should be at least $80,000 to fulfill the trust obligations.

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