Law Society of Ontario (LSO) Paralegal Practice Exam 2025 - Free Paralegal Practice Questions and Study Guide

The correct choice is the option that indicates settlement funds belonging to the client. Trust accounts are specifically designed to hold money that belongs to clients for a specific purpose, ensuring those funds are safeguarded and used only as intended, such as in connection with a legal matter for which the paralegal is engaged.

Deposit of settlement funds into a trust account serves multiple purposes: it protects the clients’ funds from being misused, it complies with the ethical obligations of paralegals, and it provides a clear audit trail for any disbursements made on behalf of the client. This practice is fundamental in maintaining the integrity of the legal profession, ensuring transparency and trust in client relationships.

In contrast, personal funds for the paralegal's fees, money for the paralegal's salary, and funds for office expenses do not belong to the client and, therefore, cannot be placed in a trust account. Those funds are typically managed through a general account instead. This distinction is critical to uphold the fiduciary duties owed to clients and to ensure compliance with regulatory standards.