What happens to trust funds a law practice is holding for clients when the practice is sold?

Client trust funds don't simply become part of the deal the way office equipment or a client list might. Money a law practice holds in trust belongs to the clients it's held for, not to the lawyer or the practice, and it remains subject to the Law Society of Ontario's trust accounting rules regardless of any sale happening around it. A selling lawyer generally can't simply hand over trust funds to a buyer as part of the purchase price or bundle them into the transaction; each client's trust balance needs to be accounted for and dealt with according to that client's instructions or the underlying matter it relates to.

In practice, this usually means reconciling every trust account before closing, returning or transferring funds as each client is owed or has agreed, and closing out the departing lawyer's trust obligations properly rather than leaving loose ends for a successor. A buyer stepping into an ongoing practice may take over active matters and any associated trust funds only with proper client consent and a clean handover, not automatically as part of the purchase.

Getting trust accounting right is treated seriously by the Law Society, since mishandling it can trigger a compliance issue independent of anything else in the deal.