Overview of Trust Activity

  • Updated

When funds are received that are to be deposited into an escrow account, the transaction is entered as a Trust Deposit.


Trust Deposits (TDP)


To enter a Trust Deposit, use the AR Entry Program (AR Manager, NEW Button) and use TDP in the Code field.  When a Trust Deposit is entered and saved, the Trust account for the Client-Matter is automatically updated.  The updated amount is reflected in all Client-Matter screens and reports.  Trust Deposits cannot be applied and posted but create General Ledger transactions upon saving.  Trust Deposits will be available for inclusion in a Daily Deposit record for Bank Reconciliation.


Trust Disbursements (TDS)


Trust Disbursements are used to move money out of a Client-Matter Trust account where the payee is someone other than the firm.  Trust Disbursements may be created either through the AR Entry Program or the Accounts Payable - Voucher Entry Program.  To enter a Trust Disbursement, use the TDS Accounting Code.  When a Trust Disbursement is entered and saved, the Trust account for the Client-Matter is automatically updated.  The updated Trust balance is immediately reflected in all Client-Matter screens and reports.  When a Trust Disbursement is entered and saved through the AR Entry Program, a General Ledger transaction and a Bank Reconciliation transaction are created upon saving the transaction.


Trust Applied as Payment (TAP)


The Trust Applied as Payment (TAP) accounting function is unique in that Trust money is usually meant to pay off an Invoice that has not yet been generated.  When you create the TAP transaction, there are no accounts receivable against which to apply it; however, if you do not create the TAP transaction prior to generating the Invoice, the Invoice will print with a Total Amount Due that is greater than what the Client actually owes.


To reflect a TAP as a payment on an Invoice to be generated, simply enter a TAP transaction through AR Entry or AP Voucher Entry.  When the TAP transaction is entered and saved through AR Entry or the Voucher posted in Accounts Payable, the Trust account for the Client-Matter is automatically updated.  The updated Trust balance is immediately reflected in all Client-Matter screens and reports.


Since the TAP cannot be applied at this time (no AR), you will need to generate an Invoice on the Client-Matter.  Once the Invoice has been generated and then posted, the TAP can be applied to the AR created by the Invoice posting.


To summarize, to pay off an Invoice that has yet to be generated with Trust money, complete the following steps in order:


1.    Make the necessary changes to work in process using the Bill Preparation Program.


2.    Go into the AR Entry Program (enter and Save) or the AP Voucher Entry Program (Save and Post), and create the TAP in the amount needed.


3.    Print and Post the Invoice.


4.    Apply and Post the TAP transaction to the Invoice.


Following is an example of the above:


A Divorce client pays the firm $10,000 as an advance payment.  The $10,000 should be deposited in that Client-Matter’s trust account (TDP).  Now it is time to send the Client his first bill.  The Firm has $1,000 in fees and $500 in expenses to bill the Client.  The Client, since he has already paid the Firm in advance, would like to see an invoice which looks as follows:

            Prior Balance:                                   $0.00

            Current Charges:                               $1,500.00

            Less Trust Applied as Payment:       $1,500.00

            Total Due:                                         $0.00

            Trust Balance:                                   $8,500.00


To accomplish this, follow steps one through five.


Trust Transfers


You may move money between Matters by using the Trust Transfer program.  The Trust Transfer program allows you to move all or part of a Trust Balance to any other Matter within the same Client Number without creating unnecessary General Ledger transactions and without creating “phantom” Trust Deposits that can skew your Daily Deposit Report.  To move trust from one Matter to another, open AR Manager and access ACTION, Retainer/Trust Transfer.  Choose the Trust option and enter the required information.  When you save the transfer, Orion will create a TTO transaction on the Matter from which the balance has been taken and a TTI on the Matter(s) to which the balance was moved.

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