Trust Accounts

Attorneys routinely receive client funds, such as unearned retainers or settlements, which they place in financial institutions. Since the funds are being held for the benefit of the client, attorneys must place these funds in an account separate from their general operating account or any personal account.

Client trust accounts:

1. If the client funds will generate interest income sufficient to offset the expense of investing them in a separate account for the client (large sums of money or funds to be held for a long period of time), the attorney should invest the funds for the client. The same principle applies if the bank offers, and an attorney chooses to utilize, a sub-accounting product that creates separate interest-generating accounts for individual clients that are tied to one master account. The following diagram illustrates this basic concept.

Chart Illustrating funds going into Master Account

2. In 1984, the Supreme Court of Texas set up the Interest on Lawyers’ Trust Accounts (IOLTA) Program to allow attorneys to pool short-term and nominal deposits into one account with the interest paid to the Texas Access to Justice Foundation. As of July 1, 1989, all Texas attorneys who handle qualifying client funds must establish an IOLTA account.

Determine if you need an IOLTA account.

Changes in FDIC Deposit Insurance Coverage - May 20 2009

Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts which will remain at $250,000 per depositor. (This supersedes the October 3, 2008 changes.) The extension announced on May 20, 2009, does not apply to the Transaction Account Guarantee Program. The unlimited coverage under the Transaction Account Guarantee Program is only in effect for depositors at participating institutions through December 31, 2009. This means that as of January 1, 2010, funds held in IOLTA accounts, as well as those held in non-interest bearing transaction accounts, will be treated the same as the funds held in all other FDIC insured accounts: each depositor's total funds held in the financial institution will be insured up to a total of $250,000. Attached is a link to the FDIC webpage containing this information: http://www.fdic.gov/deposit/deposits/changes.html

State Bar of Texas PDF file "Client Trust Accounts and the Financial Crisis".

Recent News

 

July 20, 2010

Texas Rep. Pete P. Gallego Honored with Texas Access to Justice Legislative Hero Award

June 30, 2010

New booklet "A Lawyer's Guide to Client Trust Accounts" created by Office of Chief Disciplinary Counsel helps address common questions.

May 11, 2010

Tyler Banks Recognized for Supporting Legal Services to the Poor

May 5, 2010

Texas Access to Justice Commission Raises Funds for Legal Services for Veterans

Apr. 27, 2010

League of Women Voters of Texas Receives Star of Justice Award for Access to Justice Efforts

Apr. 19, 2010

Access to Justice Commission Hosts Gala Benefiting Legal Services for Veterans

Apr. 13, 2010

"Going it Alone" an article on self-represented litigants on TexasTribune.org

Apr. 8, 2010

A blog post on Dallas Morning News about the Forum on self-represented litigants

Apr. 5, 2010

An op-ed by Chief Justice Jefferson & Commission Chair Reasoner on self-represented litigants appears in the Dallas Morning News, Fort Worth Star-Telegram and Houston Chronicle

Mar. 30, 2010

First Texas Forum on Self-Represented Litigants and the Courts to be held April 8-9 in Dallas

Mar. 12, 2010

Chief Justice Jefferson names Justice Hecht as new Foundation liaison

 

More news

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