Attorneys often handle their clients’ money; for example settlement checks, or advance payments for court costs or other expenses. If there is a large sum of money involved or held for a long time, an attorney can hold the client’s funds in an individual account, known as a Client Trust Account, and the interest earned will go to the client.

They must be placed into a Client Trust Account, and held there as long as the attorney and client are working together. As the attorney earns money, she can send a bill to the client, and withdraw her earnings from the account.

What about if the Client Disputes the Fee?

NCUA will determine, in its sole discretion, the sufficiency of these records for an IOLTA or other similar escrow account. Although the tax identification number of NC IOLTA will be assigned to all general trust accounts, the trust account and all checks should bear the name assigned by the lawyer/law firm to the account. The trust account and all checks what is iolta account must be clearly labeled as a “trust account” or drawn on a trust account. Lawyers may use identifying names on their accounts and checks, such as Real Estate Trust Account, General Trust Account, etc. The identifying account name may include the term IOLTA; however, it should be clear that the NC IOLTA program is not the fiduciary agent for the account.

Attorneys routinely receive client funds (commonly referred to as “trust money”) to be held in trust for future use. If the amount is large or the funds are to be held for a long period of time, the attorney customarily places these funds in an interest-bearing account for the benefit of the client. Prior to IOLTA, these nominal and short-term funds were combined and placed into a pooled, non-interest-bearing checking account. The reason the accounts were non-interest-bearing is that prior to 1981, commercial banks were prohibited by federal law from paying interest on demand deposits (e.g. checking accounts).

Where can I find the IOLTA Form?

This can make the bookkeeping a little tricky, so it’s important to keep accurate records about how much each client has in the account, how much money has been earned from each client, etc. Failure to keep the records straight can result in a big mess and ramifications for the attorney. Attorneys must follow proper bookkeeping procedures to keep things running smoothly. If you believe that you’ve earned fees from the IOLTA account and the attorney disputes their bill, do you know what to do? Disputed fees should remain in the trust account until the matter is resolved.

• Some IOLTA-friendly merchants will charge fees to your firm’s operating account while depositing funds to the IOLTA account.
• For more information including a FAQ and a list of IOLTA approved financial institutions, you can visit MAIOLTA.
• Doris sends you a $5,000 check to cover your retainer fee, which you deposit into Doris’ client trust account.
• Under this rule, client or third party funds in the lawyer’s possession as a result of a representation must be placed in a trust account.