Trust interest and unclaimed money: what the Fund gets
Which trust account interest goes to the Fidelity Fund, what happens to unclaimed trust money, and how to keep both off a practice's income.
By Achekam · · 5 min read · For Legal businesses in South Africa
Money sitting in an attorney's trust account earns interest, and a newly qualified principal can be forgiven for wondering who it belongs to. Not the practice: that much most people know. But the answer differs depending on who decided to invest the money, and the way it is paid over changed in 2025.
There is a second question that tends to surface only when an old matter is closed: what to do with a balance in trust that nobody has claimed, or whose owner the practice cannot even identify. The Legal Practice Act and the LPC Rules answer both. This article walks through them and shows how to keep all of it away from the practice's own income.
Interest on money the practice invests of its own accord
Section 86(3) of the Legal Practice Act, as set out on Acts Online, allows a trust account practice, of its own accord, to invest trust money that is not immediately required in a separate trust savings account or other interest-bearing account.
The key words are "of its own accord". When the practice makes that choice, section 86(5) provides that the interest on that money is paid over to, and vests in, the Legal Practitioners Fidelity Fund. The interest does not belong to the client whose money it was, and it does not belong to the practice.
Paying it over each month
How that interest reaches the Fund is now tightly prescribed. The Fidelity Fund says that under LPC Rule 54.14.16, trust account practices must pay all the interest on section 86(2) and 86(3) trust accounts, less approved recoverable bank charges, to the Fund within five working days after the end of each month, through the Automated Monthly Transfer System. The Fund notes that automated payment of this interest took effect from 1 September 2025.
Two consequences follow for the practice's routine:
- Interest on these accounts is a monthly matter, not something to settle at the annual audit.
- Only approved recoverable bank charges may be deducted before paying over. Other bank charges are the practice's own cost and belong in its business books.
Interest on investments a client asks for
The picture is different when a client instructs the practice to invest money for them, for example the proceeds of a property sale held while the client decides on their next purchase. Section 86(5), as published on Acts Online, provides that interest on money invested on a client's instructions is paid to that client, less 5% which is paid to the Fund.
The practical risk here is mixing. If a client-instructed investment and the practice's own-accord trust savings account are not clearly separated, it becomes hard to show which interest belongs to the client and which to the Fund. Keep the client's written instruction on the matter file and make sure the investment is identifiable as that client's.
Money nobody claims
Every practice of some age has them: a few hundred rand left over from a transfer where the seller has emigrated, a deposit from a client whose name was misspelt on the bank reference, a refund to an estate whose executor never responded.
The Fidelity Fund says that trust money whose owner is unknown, or which has been unclaimed for one year, must be paid to the Fund after the second annual closing of the practice's accounting records following its deposit, under section 87(4) of the Legal Practice Act. The owner keeps the right to claim the money from the Fund afterwards, so paying it over does not extinguish anyone's claim. It simply moves the money out of the practice's trust account to a body that can be found.
Before paying over, document what the practice did to trace the owner: letters sent, calls made, searches done. The auditor will want to see it, and so will an owner who reappears. When a matter is wound up, a final account that empties the matter's trust balance prevents these orphans in the first place; see closing a matter with a final account.
Refunds of bank charges and audit fees
The Fund also deals with costs. It says practices must submit their annual trust account audit reports to the provincial Legal Practice Council within 6 months of the end of the financial period, and that the application for refund of bank charges and audit fees is best lodged at the same time. The audit and the certificate that depends on it are covered in trust account audits and the Fidelity Fund certificate.
When a refund arrives, it lands in the practice's business account and belongs in the business books. Agree with your auditor where it is recorded. Many practices credit it against the expense it reimburses so that the year's true cost of bank charges and audit fees is visible.
Keeping trust interest out of the practice's income
The cleanest rule is that interest earned on trust money never passes through the practice's business account at all. Under the automated monthly transfer, it goes from trust to the Fund; under a client instruction, it goes to the client and the Fund. If any of it appears on the business bank statement, something has gone wrong and needs explaining.
Achekam is used here for the practice's own books, not its trust ledger. Within those books:
- Separate accounts. Each business has its own double-entry ledger with a standard chart of accounts created when the books first open. Add accounts for refunds of bank charges and audit fees, or for anything else the auditor wants shown on its own line, and rename or switch off accounts that do not fit a law practice.
- Imported statements that must add up. Business bank statements come in as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053, and each import is checked so that the opening balance plus movements equals the closing balance. A stray interest credit is easy to spot when every line must be accounted for. Where the workspace has an AI model configured, it can read a scanned or unrecognised PDF, and every amount it reads must appear on the page; check what it produced before relying on it.
- Corrections that leave a trail. Manual journals must balance, cannot be dated in a closed month, and once posted are corrected only by a reversal. If trust interest was wrongly posted as income, the reversal and the corrected entry both stay visible to the auditor.
Where to read the rules in full
The Fidelity Fund's trust accounts page explains the monthly interest transfer, unclaimed money and the refund application. Confirm that the automated monthly transfer covers every section 86(2) and 86(3) account the practice holds, then list the old trust balances nobody has claimed and start the tracing file today.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
