FAQ for IOLTA/IOTA
- What is IOLTA/IOTA?
- How does it work?
- Who must have these accounts?
- Where do I establish an IOLTA or IOTA account?
- How do I establish an IOLTA or IOTA account?
- Whose tax identification number should be used?
- When and how is notification of a new account provided to the Foundation?
- When should I place client funds in my IOLTA account?
- What types of client funds should go into an IOLTA or IOTA account?
- What about flat-fee agreements and retainer fee agreements?
- May I use a credit card to accept payment from a client?
- Who sends in the interest these accounts earn?
- What do I do with client funds in my IOLTA when I am unable to locate the client?
- Are the funds in my IOLTA or IOTA insured from loss if something happens to the bank?
FAQ Concerning Attorney Registration
- Do I need to register my IOLTA account?
- How do I register my IOLTA account?
- What information do I need to provide to the Court regarding my IOLTA account?
- May I use my employer's IOLTA account or do I need my own?
- What if I don't know my account or my firm's account information when I first register with the court?
- If I do not need an IOLTA account what do I need to do?
IOLTA and IOTA are acronyms for "Interest on Lawyers' Trust Accounts" and "Interest on Trust Accounts" respectively. The IOLTA program was established by the Ohio General Assembly in 1985, followed by IOTA in 1995. The interest earned on these accounts generates revenue for the state's legal aid fund. IOTA and IOLTA provisions are fully set out in Ohio Revised Code Sections 3953.231, 4705.09 and 4705.10.
Under the IOLTA/IOTA program, lawyers and title agents must place pooled escrow funds in interest-bearing accounts, with interest remitted by financial institutions to the state treasurer for deposit into the legal aid fund.
Every lawyer licensed to practice in the state of Ohio who receives client funds (filing fees, unearned retainers, settlements, etc.), must establish an IOLTA account. If a lawyer is associated with or employed by a law firm, the firm's IOLTA account may be used. If a lawyer does not receive and disburse clients' funds and neither the lawyer nor the lawyer's firm maintains a pooled funds escrow or trust account in Ohio, she or he is exempt from Ohio's IOLTA provisions.
Title insurance agents: In addition, all title insurance agents, (regardless of whether or not they are lawyers), and title insurance companies (that receive escrow funds and maintain the funds in a pooled escrow account) must establish an IOTA account.
An attorney or title agent may establish an IOLTA or IOTA account at any bank, savings & loan association, credit union, or savings bank that is authorized to transact business in the state of Ohio. Most, but not all, financial institutions in the state currently participate in Ohio's IOLTA/IOTA program. You may contact the Foundation to confirm whether the bank where you would like to establish an account is a participating bank. This web site also provides additional advice on choosing a financial institution for your account.
IOLTA and IOTA accounts must be established at an eligible, participating financial institution. The participating bank should have a uniform process for establishing a new IOLTA or IOTA account that complies with statutory requirements. This process, at a minimum, should establish an IOTA account in the name of the title insurance agent or company and be identified as an "Interest on Trust Account" or IOTA, and should establish an IOLTA account in the name of the attorney, firm, or association that established it and should be identified as an "Interest on Lawyers Trust Account" or IOLTA. The name of these accounts may contain additional identifying information to distinguish it from other accounts.
The federal tax identification number assigned to all Ohio IOLTA/IOTA accounts is 31-1126612. Financial institutions should not assign an individual's or firm's tax I.D. number to the account. There are no tax consequences to a lawyer or escrow agent, the client of a lawyer or escrow agent, a participating law firm or title company, or the recipient legal aid organization.
Once an account is established at a participating bank, the attorney must notify the Foundation by visiting the Foundation's website. Lawyers do not need to notify the Supreme Court when establishing an IOLTA or IOTA account. Account information will be requested by the Court during its biennial registration.
IOLTA accounts are established for funds that are nominal in amount or are to be held for a short period of time. If net interest could be earned for the client, then the funds should be deposited in a separate account for the client's benefit.
Examples of some types of funds to be deposited into IOLTA or IOTA accounts include:
- Retainers received from clients, until they are actually earned;
- Funds which belong in part to the client and in part to the lawyer;
- Funds of the client that are being held for disbursement at a later time;
- Personal injury settlements and awards;
- Deposits required to close property transactions.
- Prepaid court costs
The above is a list of examples of funds that are to be deposited into an IOLTA or IOTA account. There may be other types of funds that should also be deposited into IOLTA or IOTA accounts. Unless an escrow or client's trust account is established for the sole benefit of that client, all pooled client trust accounts must be either an IOLTA or IOTA account.
The Board of Commissioners on Grievances and Discipline has offered Advisory Opinions on how attorneys should handle these fees. These opinions are informal, nonbinding opinions in response to prospective or hypothetical questions regarding the application of the Supreme Court Rules for the Government of the Bar of Ohio, the Supreme Court Rules for the Government of the Judiciary, Rules of Professional Conduct, the Code of Judicial Conduct, and the Attorney's Oath of Office. You may access these opinions from the Supreme Court of Ohio's Web site. Op. 89-07 - deposit of retainer in separate identifiable bank account and Op. 96-4 - Flat fee in criminal defense representation deposited into business account.
Attorneys may allow clients the ability to pay costs and expenses related to the representation of the client with the client's credit card. However, the attorney is responsible for any brokerage charges or fees associated with the use of a credit card. This fee, like other service charges, must be paid from the attorney's operating account and not from the interest earned on the client's trust account. If a client gives an attorney $10,000 using a credit card, then $10,000 must remain in the client's trust account for the agreed upon use of these funds. You may access Op 2007-3 from the Supreme Court of Ohio's Web site.
The financial institution remits the interest from IOLTA and IOTA accounts to the State Treasurer with a monthly report detailing the account's average balance, service charges, interest rate, interest earned, and interest remitted reported to the Foundation.
The Supreme Court of Ohio's Board of Commissioners on Grievances and Discipline has offered the following informal, nonbinding Op 2008-3 from the Supreme Court of Ohio website: The Board advises that the proper disposition of client funds in a lawyer's IOLTA or individual client trust account, when either the identity or the whereabouts of the client who is the owner of the funds is unknown, is for a lawyer to follow the statutory procedure for the disposition of unclaimed funds to the state set forth in Chapter 169 of the Ohio Revised Code. A lawyer's reporting of unclaimed funds of a client whose identity or whereabouts are unknown does not violate either the ethical duty of safekeeping a client's funds under Rule 1.15 or the ethical duty to protect a client's confidentiality under Rule 1.6."
For more information on unclaimed funds, contact the state's Division of Unclaimed Funds:
Ohio Department of Commerce
Division of Unclaimed Funds
77 South High Street, 20th Floor
Columbus, OH 43215-6108
FDIC regulations make it clear that funds deposited into an IOTA or IOLTA account belong to the individual clients represented and will be insured up to the $250,000 aggregate per client, regardless of the total dollars in the account and regardless of the law firm's or title company's other deposits in that institution, as long as certain steps are followed see 12 C.F.R. 370.4 and 12 C.F.R. 370.2(h)(3)(i).
FAQ Concerning Attorney Registration
Yes, the Supreme Court of Ohio's rules of Professional Conduct require attorneys licensed in the state to register their IOLTA/IOTA accounts with the Court during the biennial registration and update the Foundation of any changes in between registration.
Upon admission to the bar and then every two years, you will receive a Certificate of Registration from the Supreme Court of Ohio. This form includes a section to register your IOLTA/IOTA accounts. In between biennial registrations, the attorney is to register new accounts, provide account updates and/or IOLTA/IOTA status changes by visiting the Ohio Legal Assistance Foundation's Web site or contacting the Foundation directly. The Foundation offers an online registration option for attorneys to update their IOLTA/IOTA status changes. You will need your attorney registration number and if you need to report the opening of an account, you will need the account number and name of financial institution where the account has been established.
An attorney is required to provide the Court with his or her registration number, IOLTA account name and number, and the name and location of the financial institution with which the account is established. You must list all IOLTA/IOTA accounts with which you are associated.
If you are working for a firm and that firm maintains an IOLTA/IOTA account, you are permitted to use your firm's IOLTA/IOTA account. When registering your firm's account, you need to obtain the number of the firm's trust account and the name and location of the financial institution with which the account is established.
What if I don't know my account or my firm's account information when I first register with the Court?
Upon first being admitted to the practice of law in Ohio, you may not have established your own IOLTA/IOTA account yet or you may not know your firm's account information. On the Certificate of Registration, you should complete the account registration section with the information that you do know; your personal information; and your firm's name and location. Once you have established your own account or know your firm's account number, then you should forward that information to the Foundation. The Foundation offers an online registration option for attorneys to update their IOLTA/IOTA status changes. You will need your attorney registration number and if you need to report the opening of an account, you will need the account number and name of financial institution where the account has been established.
In the IOLTA/IOTA section of the Certificate of Registration, please check the appropriate box on the form indicating the reason that you do not need to maintain an IOLTA account. No additional information or steps are required.