Delaware IOLTA Program
WHAT DOES DELAWARE’S IOLTA RULE REQUIRE?
- Requires lawyers to maintain pooled escrow or trust accounts with financial institutions which pay interest or dividends on IOLTA accounts which are at least as high as the interest or dividends paid by that financial institution on similarly situated non-IOLTA accounts (comparability).
- Makes participation in IOLTA by lawyers and/or law firms mandatory.
- Defines institutions eligible to hold IOLTA accounts as only those institutions which agree to pay IOLTA account customers the highest interest rate or dividend generally available at their own institution to similarly situated non-IOLTA customers. The rule change requires higher rates to be paid to qualifying IOLTA accounts only if those rates are already available to similarly situated non-IOLTA accounts.
- Specifically authorizes the use of U.S. Government money market funds and repurchase agreements collateralized with US Government securities.
- Defines allowable reasonable service charges.
- Requires institution to have a physical presence, a bricks and mortar location within the state.
DOESN’T THE RULE REGULATE FINANCIAL INSTITUTIONS?
DOESN’T THE RULE SET IOLTA INTEREST RATES?
WHAT ARE THE PRODUCT OPTIONS AVAILABLE FOR IOLTA ACCOUNTS?
WHAT IS THE SAFE HARBOR INTEREST RATE?
WHAT IS THE BENEFIT OF CHOOSING THE “SAFE HARBOR” INTEREST RATE?
ONCE WE CHOOSE THE SAFE HARBOR OPTION, CAN WE SWITCH TO ANOTHER OPTION LATER?
DO WE HAVE TO CREATE MULTIPLE TYPES OF IOLTA ACCOUNTS BASED UPON DIFFERENT QUALIFICATIONS AND RATES?
WE HAVE AN INVESTMENT COMPANY SUBSIDIARY. IS IT NECESSARY TO OFFER THE SUBSIDIARY’S PRODUCTS AS IOLTA ACCOUNTS?
CAN WE FACTOR IN THE INTEREST RATE OUR SPECIALIZED CUSTOMER SERVICE?
How you structure your rates internally is your decision, and we understand institutions may choose to provide value to customers in other ways than strictly pricing, including higher levels of service. We only need to ensure the IOLTA accounts are being treated equally and are earning the same rates as other depositors, whatever those rates are.
WHAT FEES CAN WE CHARGE AGAINST THE IOLTA INTEREST?
CAN WE FACTOR IN SWEEP OR OTHER FEES IN THE RATE?
WHAT IF SOME ACCOUNTS QUALIFY FOR A HIGHER INTEREST RATE PRODUCT AND OTHERS DON’T?
WOULD ATTORNEYS HAVE TO CHANGE TO BANKS PAYING HIGHER RATES?
WHAT IF A FINANCIAL INSTITUTION DOESN’T OFFER HIGHER RATES OF INTEREST TO NON-IOLTA CUSTOMERS WITH COMPARABLE ACCOUNTS?
HOW WILL ATTORNEYS KNOW IF THEIR FINANCIAL INSTITUTION IS AN ELIGIBLE IOLTA INSTITUTION?
TO BE ELIGIBLE, DOES A FINANCIAL INSTITUTION HAVE TO HAVE A BRANCH IN DELAWARE?
HOW DOES A FINANCIAL INSTITUTION APPLY TO BECOME AN ELIGIBLE INSTITUTION?
WHERE CAN I GET MORE INFORMATION ABOUT THE RULE?
For additional information, please contact:
Megan GreenbergDelaware Bar Foundation
100 W. 10th Street, Suite 106
Wilmington, DE 19801
Tel: 302-658-0773
Fax: 302-658-0774
Email: mgreenberg@delawarebarfoundation.org
Web: www.delawarebarfoundation.org