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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 funds.” 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.

B. OPENING, CHANGING OR CLOSING AN IOLTA ACCOUNT

Select an Eligible Financial Institution

There are twenty eligible financial institutions to choose from; the list is available here . Because IOLTA interest revenue directly supports civil legal aid for low-income Delawareans, attorneys are encouraged to select one of our Prime Partners that have made a special commitment, going beyond minimal compliance with the regulations to pay competitive rates.

Go to the Eligible Financial Institution and Open an IOLTA Account

Any attorney licensed to practice in Delaware may open an IOLTA account only at an eligible financial institution. The institution will likely verify that you are an attorney and confirm your identity, and document your type of business entity (LLP, LLC, sole proprietor, etc.) but it should not create undue obstacles to opening the account. Ensure that your IOLTA Account is Set up Properly

To be an IOLTA account, the bank should associate the account with the Foundation’s tax ID number. Confirm this with the bank.
The title of your account must contain:
1. the precise name of the attorney or law firm as registered with the Supreme Court
2. the acronym “IOLTA”
3. one of the following phrases (usually designated by the bank): “Rule 1.15A Attorney Trust Account” “1.15A Attorney Escrow Account” “1.15A Trust Account” or “1.15A Escrow Account.” Examples: Sally Smith 1.15A Attorney Trust Account/IOLTA Spade & Jones, LLP IOLTA 1.15A Attorney Escrow Account
Use your own address. The IOLTA Fund should not receive and takes no responsibility for your monthly bank account statements.
Only “Allowable Reasonable Service Charges” may be deducted from any interest earned on your IOLTA account. These charges include per check charges, per deposit charges, an account maintenance fee, automated transfer (sweep) fees, FDIC insurance fees, and a reasonable IOLTA administrative fee for the direct costs of compliance with Delaware’s IOLTA Rules. You are responsible for paying all other charges, including bank overdraft fees, wire transfers, remote deposits, and fees for checks returned for insufficient funds.

Enroll with the Delaware Bar Foundation
1. Complete your online enrollment within 30 days of opening your IOLTA account, by completing a Notice of Enrollment form.
If you are closing an IOLTA account, send the Foundation a letter advising that the account has been closed. The letter should include the IOLTA account number, the eligible financial institution's name and address, the name and address of the lawyer or law firm and the date the IOLTA account was closed.
If you change the name of your firm but retain the IOLTA account, you must alert the Foundation of the name change and that you have alerted the eligible financial institution of the name change and the Supreme Court of Delaware so that our records are consistent. Please complete a Notice of Enrollment Form for any such name change.

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