An Update on IOLTA


About IOLTA Accounts

Because "Interest on Lawyer Trust Accounts," more commonly and simply called IOLTA accounts, is so fundamental to law firm operations, any change in IOLTA regulation is worth noting - especially since the Rules of Professional Conduct and the regulations of all State Bar associations hold lawyers to strict compliance in managing them. During the past year several major developments have lightened the IOLTA management task for most lawyers.

IOLTAs Are Fully Insured through Dec 31, 2012

As the financial crisis peaked in the fall of 2008, when Congress raised the FDIC insurance limit on bank accounts for the first time in 28 years to a "temporary" $250,000, the FDIC ruled that all amounts in client IOLTA trust account with proper identification and accounting safeguards would be protected for two years, through December 31, 2010. When Congress passed the Dodd-Frank financial reform act in the latter part of 2010, it extended the higher FDIC limits - but did not include IOLTA accounts. This led to the usual Congressional brinksmanship until an IOLTA extension was passed just as the year, and Congressional session, ended. The FDIC has now issued a final rule revising its deposit insurance regulations to reflect this. The final rule requires that each insured depository institution that offers noninterest-bearing transaction accounts such as IOLTA accounts must post prominently an amended notice in its office lobbies and on its Web sites explaining that IOLTAs will be fully insured through December 31, 2012.

Please see full newsletter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ed Poll, LawBiz | Attorney Advertising

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