IOLTA and Client Trust Accounts
Send inquiries regarding the trust account rules: RPC 1.15A (Safeguarding Property) and RPC 1.15B (Required Trust Account Records) to:
Rita Swanson, Audit Manager
Washington State Bar Association
1325 Fourth Ave., Suite. 600
Seattle, WA 98101-2539
As of Jan. 1, a new IRS regulation went into effect. It impacts lawyers who accept debit and credit card payments from clients that may adversely impact your client trust accounts.
Read more on NWSidebar.
As of Jan. 1, 2013, FDIC insurance available to IOLTAs is limited to the standard amount of $250,000 per owner of the funds (client), per financial institution, assuming the account is properly designated as a trust account and proper accounting of each client’s funds is maintained. Funds deposited in IOLTAs are no longer insured under the Dodd-Frank Deposit provision.
Learn more about the FDIC changes for IOLTAs.
The Washington Supreme Court issued an order adopted on Nov. 5, 2009, which became effective on Dec. 1, 2009. The order amended RPC 1.15A, governing the Washington IOLTA (Interest on Lawyer Trust Account) program. These changes affected your bank's IOLTA account policies.
Under the rule change, banks offering IOLTA accounts are required to comply with the comparability rule. Comparability means that IOLTA accounts must earn a comparable rate of interest with non-IOLTA accounts of similarly-sized demand accounts. In other words, IOLTA accounts must earn the same level of interest as non-IOLTA accounts.
Additionally, under the rule amendment, the LFW, rather than the Washington State Bar Association, maintains the list of financial institutions that are authorized to offer IOLTA accounts. These financial institutions must comply with the comparability rules and report overdrafts on lawyer trust accounts to the WSBA.
A list of approved banks is available at the
Legal Foundation of Washington.
If you have any questions regarding the bank list, please contact the Legal Foundation of Washington: Caitlin Davis Carlson (executive director) or Linda Graham (IOLTA manager) at 206-957-6288.
Take this form to the bank when you open your IOLTA or individual trust account
Managing Client Trust Accounts: Rules, Regulations, and Common Sense(updated for April 14, 2015 rule change)
Informative article by a WSBA auditor regarding the random audit process
A must-read article of recent scams targeting lawyers
Be Alert to Phishing - How not to Fall Prey
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