Taking payment upfront for a fixed-fee will in Victoria: does it go to trust?

Getting paid upfront is one of the easiest ways to make fixed-fee wills less painful. No chasing invoices after the signing, no "I'll pay when I pick it up". But in Victoria, money paid before the work is done isn't yours yet, and the online-payment tools most firms reach for pay out to whatever account you plug in. Here's how the rules fit together.

Upfront money is trust money

The VLSB+C's trust money page lists, as trust money, money received for legal costs in advance of providing the services. Section 137 of the Uniform Law then requires trust money to be deposited into a general trust account as soon as practicable. The NSW Law Society's reading of "as soon as practicable" is by the next banking day.

So if a client pays $550 on your website on Tuesday night for a will you'll draft on Thursday, that $550 belongs in trust until you've earned it.

Getting it out of trust

The Uniform General Rules, rule 42, set out how you can withdraw trust money for legal costs. One route that suits fixed-fee wills: give the client a bill that refers to the proposed withdrawal, and if they don't object within 7 business days, withdraw it. Read rule 42 for the other routes and the exact conditions.

Costs disclosure for a simple will

A worked example: a $550 inc GST single will is $500 excluding GST, so it sits under $750 and doesn't need formal disclosure. A $990 inc GST couple's package is $900 excluding GST, so it falls in the short-form band. And if the matter grows (say the "simple will" turns into a testamentary trust), the VLSB+C says you must tell the client in writing once the estimate is exceeded and make the required disclosure at that point.

Setting up online payment properly

• Point the payout for advance fees at your trust account, not the office account.
• Make sure each payment can be matched to a client and matter. The payment reference should carry the matter number or client name.
• Work out how merchant fees and any card surcharge will be handled. I haven't found a clear published answer for Victoria, so ask your trust account examiner or the VLSB+C before you go live.
• Issue the bill that refers to the withdrawal once the work is done, then withdraw under rule 42.
• Keep the fee and what it covers in writing, even under $750. It saves arguments later.