Handling funds on behalf of a client is an important and sensitive responsibility. Brokers in California must ensure that they follow appropriate procedures and regulations when establishing Trust Accounts For your customers.

Ronald's Scenario and his Trust Account

Ronald, a broker, is setting up a Trust Account to withhold funds from a client in California. Of the following options, which should you do?

• Choose a recognized warehouse located in California.
• Open the account in the name of the client as trustee.
• Make sure the bank requires advance written notification to authorize withdrawals.
• Make sure the account earns interest.

Correct Answer and Analysis

The correct answer is Choose a recognized warehouse located in California. Under the law (BPC 10145 (a)(1)), the deposit is required to be in California, except in special circumstances. As for the other options:

• The account must be opened in the name of the broker, not the client.
• The Trust Account There should be no requirement to give written notice before making withdrawals.
• The Trust Account may bear interest if requested by the principals of the transaction, according to BPC 10145 (d).

Conclusion

Brokers in California must be meticulous and follow state regulations when establishing Trust Accounts. Choosing a suitable and recognized depository in California is essential to ensure trust and protect the interests of your clients.