Controlled money and trust money: what makes money controlled, and what changes

Controlled money is still trust money. What sets it apart is that the client, in writing, has decided which account it goes into. That one difference changes how the money is deposited, how it is held and how it can be paid out.

Controlled money is a kind of trust money

For the purposes of this Law, trust money is money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice

The list of what trust money includes then names, at paragraph (b), "controlled money received by the law practice". Every obligation that attaches to trust money generally is the starting point for controlled money too.

What makes money controlled money

controlled money means money received or held by a law practice in respect of which the law practice has a written direction to deposit the money in an account (other than a general trust account) over which the law practice has or will have exclusive control

Three things have to be present: a written direction, an account that is not the general trust account, and the practice's exclusive control of that account. Without the written direction, the money is not controlled money, whatever account the client asked for over the phone.

controlled money account means an account maintained by a law practice with an ADI for the holding of controlled money received by the law practice

Compare the general trust account, which section 128 defines as an account "maintained by a law practice with an authorised ADI for the holding of trust money, other than controlled money or transit money". One needs an authorised ADI and the other an ADI. The Law Society of NSW's External Examiner Guidelines 2026 put that difference in practical terms: a general trust account at an authorised ADI on its list, and a controlled money account at any ADI regulated by APRA.

Where controlled money goes when it arrives

Ordinary trust money has one destination. Section 137 says a law practice "must deposit trust money (other than cash) into the law practice's general trust account as soon as practicable after receiving it", and paragraph (b) of the exceptions covers money that "is controlled money or transit money".

As soon as practicable after receiving controlled money, a law practice must deposit the money in the account specified in the written direction relating to the money.

How it is held

The law practice must hold controlled money deposited in a controlled money account in accordance with subsection (1) exclusively for the person on whose behalf it was received.

The law practice must ensure that the controlled money account is used for the deposit of controlled money received on behalf of the person referred to in subsection (2), and not for the deposit of controlled money received on behalf of any other person, except to the extent that the Uniform Rules otherwise permit.

Each of those subsections carries a civil penalty of 50 penalty units.

Paying it out

Money in the general trust account is paid out, under section 138(1)(b), "only in accordance with a direction given by the person".

Controlled money is tied to writing. Section 139(3) says that, "Subject to a court order or as authorised by law", it must not be disbursed except in accordance with "the written direction relating to the money" or "a later written direction given by or on behalf of the person on whose behalf the money was received". A client who rings to move the money has not given either.

Keeping the direction

The law practice must keep a written direction mentioned in this section for 7 years.

The account steps themselves are in the Uniform Rules. Section 139(7) says they "may make provision with respect to the receipt of controlled money, the establishment and maintenance of controlled money accounts, the withdrawal of controlled money, and the keeping of registers of controlled money." Read those rules before opening the first account.

This article is general information about the Uniform Law, not legal advice, and does not take account of your practice's circumstances. It quotes the Legal Profession Uniform Law from the Victorian authorised version incorporating amendments as at 11 October 2023, and is current as at 15 September 2026. The Uniform Law applies in New South Wales, Victoria and Western Australia; other states and territories have their own legislation. Check the current legislation and the Uniform Rules before relying on any of it.