How long you have to keep trust account records runs from three years to indefinitely, but for most people the working answer is five to seven years after the account closes or the matter ends. Attorneys are bound to a five-year minimum under the ABA Model Rules, trustees have to keep records through the life of the trust plus a tax buffer, banks default to a five-year clock under the Bank Secrecy Act, and the IRS can extend any of these timelines when income was underreported or property basis is in play. When more than one rule applies, the longest period wins.
Attorneys: Five Years After the Representation Ends
ABA Model Rule 1.15 requires lawyers to preserve complete records of client trust account funds for five years after the representation ends.1American Bar Association. Rule 1.15 Safekeeping Property The ABA’s Model Rules on Client Trust Account Records say the same for all financial records tied to the account.2American Bar Association. ABA Model Rules on Client Trust Account Records – Rule 1 Recordkeeping Generally
Five years is the floor, not the ceiling. States adopt their own versions of Rule 1.15, and many stretch the period to six or seven years, with some going longer for particular record types. If you practice in more than one jurisdiction, follow the longest applicable rule. Checking your state bar’s exact requirement is worth the ten minutes.
Trustees and Executors: The Life of the Trust Plus a Buffer
Individual trustees and estate executors don’t operate on a single fixed clock. Their retention period is shaped by two obligations running at once: the duty to account to beneficiaries, which lasts as long as a beneficiary can raise questions, and the IRS statute of limitations on trust tax returns.
Because trust administration can span decades for long-term or irrevocable trusts, the practical rule is to keep records for the entire life of the trust plus at least three to six additional years to cover tax audits and late beneficiary claims. For estates, keep records for at least three years after the final estate tax return is filed, and six years if there is any chance income was underreported.
Destroying records early is where trustees get hurt. A trustee who cannot produce documents to explain a deposit, withdrawal, or investment decision is personally liable for losses tied to the gap, and courts resolve doubts against the trustee rather than the beneficiary.
Real Estate Brokers and Mortgage Escrow
Brokers holding earnest money, security deposits, or other client funds in trust accounts answer to their state real estate commission. These retention periods typically run three to six years after a transaction closes or funds are disbursed. The exact timeline varies enough state to state that a general number is risky; the licensing board publishes the specific requirement.
Mortgage lenders and servicers running escrow accounts have a separate federal obligation. Under Regulation Z, closing disclosures and related documents must be kept for five years after the loan closes.3eCFR. 12 CFR 1026.25 – Record Retention Other lending disclosures carry a shorter two-year retention period, but the five-year rule for closing documents is the one most often missed.
Banks and Financial Institutions: Five Years After the Account Closes
Trust records at banks sit under layered federal rules. For national banks acting as fiduciaries, the Office of the Comptroller of the Currency requires three years of retention after the account terminates or any related litigation concludes, whichever comes later.4eCFR. 12 CFR 9.8 – Recordkeeping The Bank Secrecy Act then imposes a five-year retention period for records tied to customer identity, transactions, and account activity, with the clock starting when the account closes rather than when the last transaction occurs.5GovInfo. 31 CFR 1010.430 – Retention of Records
Because the BSA covers a broader range of documentation than the OCC rule, its five-year window effectively overrides the three-year rule for most trust records at banks. Treat five years as the working minimum.
The IRS Clock Runs on Top of Everything Else
Any trust account that generates taxable income triggers IRS retention requirements that run alongside the professional rules. The clock is tied to the statute of limitations for assessing additional tax.
- Three years is the standard period. The IRS generally has three years from the date a return is filed to assess additional tax, so records supporting income, deductions, and credits on a trust return need to be kept at least that long.6Internal Revenue Service. How Long Should I Keep Records
- Six years applies when more than 25% of gross income was left off the return. The same extended window covers estate and gift tax returns where more than 25% of the gross estate or total gifts was omitted.7Office of the Law Revision Counsel. 26 USC 6501 – Limitations on Assessment and Collection
- There is no time limit at all when no return was filed or the return was fraudulent. Records must be kept indefinitely in those situations.8Internal Revenue Service. Time IRS Can Assess Tax
Property Basis Records Live Longer
Records used to calculate gain or loss on trust property must be kept until the statute of limitations expires for the year the property is sold.9Internal Revenue Service. Topic No. 305, Recordkeeping For a trust holding real estate or securities for many years, that means hanging onto purchase documents and improvement records for the entire holding period plus at least three more years after the sale. Those files outlive the ordinary trust tax clock, often by decades.
What Happens If You Destroy Records Too Early
For attorneys, a Rule 1.15 record-keeping violation can bring professional discipline up to suspension or disbarment.10American Bar Association. ABA Model Rules on Client Trust Account Records Trust account violations are among the most common reasons for attorney discipline nationally.
For trustees and executors, the hit is financial. A fiduciary who cannot produce records faces personal liability for losses, reduced or eliminated compensation, removal, and the cost of reconstructing records through court proceedings. The adverse inference is what makes it bite: when a trustee can’t explain a transaction, courts can presume the worst, and that presumption is hard to overcome.
Destroying Records After the Clock Runs
Before destroying anything, confirm every applicable clock has run. The professional retention period and the IRS period often expire at different times. A trust record that satisfies a state bar’s five-year rule can still sit inside the IRS’s six-year window for substantial income omissions. Wait for the longest applicable period to end.
Once the time is up, federal law requires reasonable measures to prevent unauthorized access during disposal. Paper records should be shredded, burned, or pulverized so they cannot be reconstructed. Electronic records and media must be destroyed or erased so the data cannot be recovered.11eCFR. 16 CFR Part 682 – Disposal of Consumer Report Information and Records If you use a document destruction company, verify its competence through references, certifications, or independent audits before handing over sensitive material.