How Trust Accounting Software Can Improve Your Legal Practice

Eric Dunn
January 10, 2023

How Trust Accounting Software Can Improve Your Legal Practice

You have a very busy law firm where everyday tasks include managing remote workers, handling caseloads and filings, and determining whether or you can take certain cases.

Anything that automates processes is a good thing.

You’ve already got QuickBooks for accounting and Amicus Attorney to manage cases, as well as electronic filing and paperwork management.

Your accounting software is great for handling your finances, but what about handling a client’s finances?

We’re talking about specialized trust accounting software and how it can improve your legal practice.

Why do I need trust accounting software?

You already know what a trust is, and someone at your law firm probably administers a trust for someone as a legally appointed executor of that trust.

But holding, receiving, and disbursing funds for your clients takes time and effort.

How much money do you disburse in any given month? When do you disburse it? Into which bank accounts and to whom?

Accounting and financial software can only do so much, but it can’t understand the nuances of managing a trust with regards to the legal framework of your state.

Your practice needs trust accounting software to manage the details of trust administration.

What is trust accounting software?

It is a specialized computer program that allows you to manage someone’s trust, estate, and investment portfolio.

Why is the right trust accounting software important?

Trusts require regular maintenance, at least monthly, much like your law firm’s finances need monthly monitoring to make sure your cash flow is accurate.

Not only do you have to make sure the trust is funded properly and you follow good accounting practices, but you also must follow laws and regulations as set forth in the trust.

Plus, each individual trust is unique because every client’s situation is unique. While one trust might have $500,000 to give to one person over the span of five years, other trusts might disburse $50 million to 20 people over 20 years.

And what happens when some of those 20 people pass away in the interim? Who gets that person’s inheritance after that?

What do you do when another attorney in your firm takes over the trust when you retire, switch firms, or leave to start your own practice?

As you can begin to see, managing trusts for your clients can get complicated.

What are the main features of trust accounting software?

Trust accounting software takes care of the bookkeeping aspects of managing trusts by following state laws where the client’s trust was filed. It also maintains accurate records as to each trust’s activities in case there are questions, filings, or challenges from inheritors later.

Trust accounting software tracks the money entering and leaving the accounting, noting where the funding comes from and to which accounts the money goes to and when.

Rather than having to set up special bank accounts or third-party transaction software that doesn’t follow the stipulations of each trust, trust accounting software makes this much easier.

All you have to do is enter the correct information one time and let the software do the rest. You get alerts when things happen, like when money comes in or goes out, and if anything changes from the normal operation of the trust.

Trust accounting software lets you see real-time information at a glance through a simple dashboard:

  • Balances
  • Transactions
  • Transfers
  • Inlays
  • Outlays
  • Invoices

Most importantly, trust accounting software follows the legal requirements of the trust.

What are some ways trust accounting software improves my practice?

You can already see that trust accounting software helps you with everyday tasks of trust administration. But there are big-picture views of how this type of computer program can help your law firm.

Improved Efficiency

You have plenty of other things to do at your busy practice, whether you are a sole practitioner or you’re part of a larger firm with 50 attorneys. Document management, filings, client meetings, responding to emails, and negotiating with opponents in cases takes time and effort.

When you can streamline mundane processes, it frees up your time and the time of your staff to do other important things.

The right trust accounting software takes care of all the administrative grunt work quickly, easily, and effectively so you can focus on clients rather than something that can be automatically handled by the proper digital tools.

Legal Compliance

Trust accounting software handles the legal compliance within your state or the state where the trust is valid.

Are you licensed in multiple states? Each trust account can be set up using the unique regulations of each state.

You can show evidence of compliance within the trust accounting software’s reporting features.  

Enhanced Security

Your trusts’ critical information stays safe and secure behind an encrypted login and cloud-based protocols. Set up two-factor authentication for added security to make sure that only authorized personnel have access to each trust account.

The software administrator at your firm maintains who has access to what accounts, and each account is protected from data loss.

Improved Reporting

Trust account management requires strong reporting. Trust accounting software reduces the chances of errors, and you don’t have to constantly double-check information with every reporting cycle.

Creating reports becomes a breeze with the right software because you don’t have to transfer data into a spreadsheet (where you might create human input errors) before adding in formulas that might lead to mistakes.

The right information is available to you with a few clicks within the platform. Set up the right data you want to report on, select it later on, and the process is automated for every reporting cycle. You can even automatically email the reports to whoever needs them.

Simplified Reconciliation

Just like regular accounting, trust accounting software handles monthly reconciliation automatically. You have clear views of all accounts, see what funds are moving, and you can spot any misappropriation of funds right away.

HWA International Can Help

Trust account management takes precision and accuracy with every transaction. Everything must be followed precisely.

Trust accounting software from HWA International can help with this process.

Make your firm more efficient. Contact us today and we’ll arrange a demo of our trust accounting software.

Related Blogs