Issued a refund to a client from my trust account. Why did the money come from the operating account instead of the trust account?

This article outlines why refunds are processed from the operating account by default, what happens to funds remaining in the trust account, and how you can transfer them.

Overview

In the past, trust accounts were set up to block all debits. This safeguard helped protect client funds by preventing fees or withdrawals from the trust (IOLTA) account. Because of this, refunds could not be sent directly from the trust account. Instead, refunds were processed from the operating account to ensure the trust account remained secure.

Legacy Configuration

If your firm is still on our legacy sponsor bank configuration, the refund process works as follows:

1. The refund amount is withdrawn from your operating account and sent to your client.

2. You must then transfer the same amount from trust to operating to balance the accounts.

You can transfer the funds by using the Confido transfer feature or your bank’s online banking portal to move the funds between accounts.

New Sponsor Bank Configuration

For firms connected through our new sponsor bank, refunds are now debited directly from your trust account. This allows refunds to be sent without manually moving funds between accounts.

To ensure refunds process successfully, your firm must allow the following Bank IDs (also called Originator IDs) to debit your trust account:

• 2638633811
• 9263863381
• 8263863381
• 4263863381
• 3263863381
• 2263863380

If these IDs are not allowed by your bank, the refund may be blocked.

Not sure?

Contact support@confidolegal.com to determine which configuration is set for your firm, or request an update to the new configuration.