Lawyers’ Trust Accounts Board Helping to Secure Equal Access to Justice
Frequently Asked Questions
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The PA IOLTA Board provides assistance to attorneys with questions about establishing an IOLTA account. If your question is not answered in the Frequently Asked Questions below, please contact our staff for assistance at 717-238-2001. If you received a letter from the IOLTA Board in conjunction with the Board’s annual attorney compliance monitoring, please contact our office immediately.
Print the Enrollment Form and complete it with the bank manager of the approved financial institution you have selected. The IOLTA Board encourages attorneys to patronize Platinum Leader Banks, which support the mission of the IOLTA Board by paying a premium yield rate on IOLTA accounts. Fax a copy of the completed Enrollment Form, along with a list of all the lawyers who use the IOLTA account in the regular course of their practice, to the IOLTA Board at 717-238-2003.
If a lawyer does not comply with the requirements outlined in Rule 1.15 of the Pennsylvania Rules of Professional Conduct he or she will be subject to the same disciplinary penalties as any lawyer who does not comply with any of the other requirements for the practice of law in Pennsylvania.
Annually, the IOLTA Board runs a compliance check on the IOLTA accounts reported by each Pennsylvania attorney on his or her annual registration form. If you received a letter from the IOLTA Board, you either reported an IOLTA account that the bank is not reporting to us or you reported an exemption that the Board did not grant. Please call our office immediately to resolve the conflict.
Yes, but exemptions are not automatic. They must be requested and granted by the IOLTA Board. Once granted, exemptions are effective for 3 years after which time the attorney may request another. If an exemption is granted, Qualified Funds must be deposited in a non-income producing Trust Account. Write to the IOLTA Board if you believe any of the permitted exemptions apply. Exemptions will be granted if:
(i) Low balance account: If the average daily balance of your current IOLTA account, as measured over twelve months, is less than $5,000, you may request an exemption.
(ii) Account service charges routinely exceed income: If the bank service charges assessed on your current IOLTA account routinely exceed the interest earned, you may request an exemption.
(iii) Extreme impracticality or undue hardship: Under limited circumstances it would be unduly burdensome for a lawyer to maintain a Trust Account as an IOLTA Account. An example includes the lack of an Eligible Institution that offers IOLTA Accounts in the lawyer’s geographical location.
(iv) Other compelling and necessitous reasons: There may be compelling and necessitous reasons justifying an exemption from the requirement that the lawyer maintain a Trust Account as an IOLTA Account. A lawyer who demonstrates a compelling and necessitous reason for not complying with IOLTA may request an exemption. A philosophical objection to IOLTA does not constitute a compelling and necessitous reason for an exemption.
Qualified Funds are client monies received by a lawyer that in the good faith judgment of the lawyer, are nominal in amount or are reasonably expected to be held for such a short period of time that sufficient interest income will not be generated to justify the expense of administering a segregated account.
A lawyer will not be liable in damages or held to have breached any fiduciary duty or responsibility because monies are deposited in an IOLTA account pursuant to the lawyer’s judgment in good faith that the monies deposited were qualified funds for deposit in an IOLTA account.
No, unless you have received an exemption from the IOLTA Board pursuant to the IOLTA Regulations. Qualified Funds must be deposited in an interest-bearing IOLTA Account which benefits the IOLTA Program. Only when an exemption is granted by the IOLTA Board may Qualified Funds be deposited in a non-interest bearing account. Non-Qualified Funds must be deposited in an interest-bearing Trust Account which benefits the client.
Certainly. Lawyers should soundly exercise their discretion in determining whether a given trust deposit is of sufficient size or duration to justify its placement in a separate interest-bearing account, with the interest payable to the owner. Lawyers decide whether a separate interest-bearing account should be established to benefit the client or owner of the funds.
The IOLTA Board is not authorized to offer legal advice or ethical opinions. For guidance, please read Handling Funds of Others.
Nobody. The Internal Revenue Service (IRS) has ruled that there are no tax consequences to the client, the lawyer or the IOLTA Board. Also, there is no IRS reporting requirement for the lawyer, financial institution or client since all IOLTA accounts will use the Tax Identification Number of the IOLTA Board.
Financial institutions are not mandated to participate in IOLTA. However, financial institutions that wish to be depositories into which lawyers can deposit Rule 1.15 Funds, must be approved by the Supreme Court of Pennsylvania.
IOLTA accounts are interest-bearing accounts. The rate of interest or dividend paid on IOLTA Accounts shall be not less than the highest rate of interest or dividend generally available from the Eligible Institution to non-IOLTA customers when the IOLTA Account meets the same minimum balance or other eligibility qualifications. The financial institutions remit the interest at least quarterly to the IOLTA Board.
Interest earned on IOLTA accounts may be used only for the following purposes:
- delivery of civil legal assistance to the poor and disadvantaged;
- educational legal clinical programs and internships administered by law schools;
- the administration of justice; and
- the administration and development of the IOLTA program.
All disbursements and allocations of IOLTA funds are subject to the prior approval of the Supreme Court of Pennsylvania.