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Frequently Asked Questions - Banks/CUs
Q: Do all attorneys need IOLTA accounts? A: Only attorneys that handle client trust funds that are nominal in amount or held for a short time are required to establish IOLTA accounts. Licensed attorneys in Texas who do NOT handle client trust funds are not required to establish an IOLTA account. Q: Where do attorneys deposit client trust funds that do not meet the short-term or nominal fund requirements of IOLTA? A: Client trust funds that do not meet the nominal or short-term fund requirements of an IOLTA account should be deposited in a separate demand account to earn interest for the benefit of that client. The attorney must use that client’s tax ID # instead of the Foundation’s tax ID #. Q: How can a financial institution become eligible to hold IOLTA funds? A: If your financial institution currently holds IOLTA accounts, and you would like to learn more about becoming eligible, visit the Become an Eligible Financial Institution section for more information. If your institution does not currently hold IOLTA accounts, please contact Janice Cappiello at 512.320.0099, ext. 108, before opening IOLTA accounts. You must acquire a bank code and a packet of instructions and forms from the Foundation before qualifying for the eligibility process. Q: How do financial institutions assist attorneys or law firms in opening IOLTA accounts? A: The financial institution must complete the IOLTA Notice to Financial Institution, which instructs the financial institution how to establish an IOLTA account. The attorney, law firm or financial institution must then mail or fax a copy of the completed form to the Texas Access to Justice Foundation. Q: Are IOLTA accounts subject to service charges? Who pays the services charges? A: Allowable reasonable fees are the only fees and service charges that may be deducted by an eligible institution from interest earned on an IOLTA account. Allowable reasonable fees may be deducted from interest or dividends on an IOLTA account only at the rates and in accordance with the customary practices of the eligible institution for non-IOLTA customers. No fees or service charges other than allowable reasonable fees may be assessed against the accrued interest or dividends on an IOLTA account. Any fees and service charges other than allowable reasonable fees shall be the sole responsibility of, and may only be charged to, the attorney or law firm maintaining the IOLTA account. Q: Does the Foundation pay for the checks, deposit slips and other related fees on the client trust accounts? A: No. Any fees and service charges other than allowable reasonable fees shall be the sole responsibility of, and may only be charged to, the attorney or law firm maintaining the IOLTA account.
Q: Who can a bank contact if it has a question about an IOLTA
account?
A: While the Texas Access to Justice Foundation can
provide information and guidance about IOLTA accounts
and compliance in general, much of which is on the website, the Foundation is not able to provide specific advice and
counsel about individual accounts not related to IOLTA compliance, such as
dormant accounts. Legal questions should be presented to your in-house
counsel, however, another available resource is the
Texas Bankers Association
(TBA). The TBA has represented banks of all sizes and charter types
since its founding in 1885. The
TBA Legal Hotline is a free service for members with legal and regulatory
questions. Although the TBA Legal Hotline is not a substitute for legal
counsel, banks can benefit from the expertise of TBA's in-house attorneys.
The TBA Compliance Hotline number is: (888)353-3933 and is a service
provided to their member banks. The hotline is staffed by three compliance
lawyers and three compliance specialists.
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