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A Lawyer’s Guide to IOLTA Accounts

A. OVERVIEW
Attorneys routinely receive third party funds to be held in trust for future use. If these funds are large in amount or to be held for a long period of time, the attorney customarily deposits the money in an interest-bearing account in the name of, and for the benefit of, the third party. In the case of deposits which are small in amount or are short term in duration, it is impractical to establish separate interest-bearing accounts. The IOLTA program requires attorneys to open IOLTA accounts for the deposit of these “IOLTA-eligible fund.” in an eligible financial institution in Delaware. No client is deprived of any practical income opportunity because the administrative costs to the lawyer and the service charges of the financial institution, coupled with a resulting tax liability to the client, would more than offset any income earned.

The determination of whether moneys are “IOLTA-eligible funds” is made solely as the “reasonable determination” of the attorney who holds the funds in trust. See Rules of Professional Conduct 1.15(f).

The funds pooled in IOLTA accounts generate interest income that the financial institutions transmit directly to the Delaware Bar Foundation. Guided by its 12 member Board of Directors, the Delaware Bar Foundation uses this income to make grant awards to non-profit civil legal aid organizations that assist low-income Delawareans. For more information, review Rules 1.15 and 1.15A of the Delaware Rules of Professional Conduct or contact the Foundation’s Executive Director.

CONTACT US

Megan S. Greenberg
Executive Director
100 W. 10th Street, Suite 106
Wilmington, DE 19801
phone: 302-658-0773
fax: 302-658-0774
Email us here