2 thoughts on “Trust Accounting: Basic Requirements

  1. Mike, I think the IOLTA account is not the ONLY location for client funds. 1.15A(a) says”…shall hold such funds in one or more accounts in a financial institution or, in appropriate circumstances , a pooled interest-bearing trust account pursuant to Rule 1.15B.” (the IOLTA account). The thinking was that funds held as an executor or other fiduciary were still to be considered client funds, and it was not always appropriate to hold them in a pooled account. It was also thought to be appropriate for the clients to have the first cent of their interest if they wanted it, paltry though it may be at current rates, so you are allowed to set up a separate account for the client matter. Some real estate transactions were occasionally structured with an escrow account in a client id number for two signatures – buyer’s and seller’s counsel. In a low interest rate time, clients are not interested in paying for this service, but we may not be in this environment forever. Although realtors are required to put deposits into their IORTA accounts unless it will make $50 in interest, I don’t read 1.15B as requiring the deposit of a lawyer’s client funds into the IOLTA. After all, the pooled account was an exception to the rule that your client’s money was not only to be kept separate from your money but also separate from anyone else’s money. So I don’t think it is really a default in the sense that you should be disciplined for not putting all third party funds in the IOLTA you are nevertheless required to have; there are other acceptable options. Jean

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