IOLTA—Information for Banks

IOLTA Interest Remittance Report
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Download Excel Spreadsheet

Checklist for Opening NC IOLTA Accounts

IOLTA Accounts: All general client trust accounts must be IOLTA accounts!!

Lawyers often handle money that belongs to clients. Often, the amount of money that a lawyer handles for a single client is nominal and/or held for only a short period of time. Traditionally, lawyers have placed these individual deposits together into pooled trust accounts, called general trust accounts. IOLTA accounts are interest-bearing general trust accounts, from which banks forward the interest net of service charges to the State Bar's IOLTA program, which uses the money to fund law-related charitable causes. By order of the NC Supreme Court, beginning in 2008, lawyers must have all general client trust accounts established as IOLTA accounts. Only dedicated lawyer trust accounts (those maintained for the sole benefit of a single client or transaction) will not be IOLTA accounts. Lawyers' operating accounts should not be IOLTA accounts.

All lawyers must be in compliance with this requirement by June 30, 2008.

Opening IOLTA Accounts

Only attorneys can have an attorney trust account. Attorneys must provide documentation to NC IOLTA regarding all IOLTA accounts. Documentation can be provided in a number of ways, including the IOLTA Status Update Form or the NC State Bar Dues Notice (in paper form or a copy of their electronic submission).

The documentation may be provided by the attorney at the time the account is opened or it may be sent to the IOLTA office at a later date. The IOLTA Status Change Form is available from the IOLTA office or by clicking here.

Trust Account Rules

The procedures and rules governing all attorney trust accounts are established by the North Carolina State Bar. These rules apply to IOLTA accounts. For more information about trust account rules, contact the NC State Bar at 919-828-4620 or view the trust account guidelines.

The NSF Notification Form is required by the NC State Bar for ALL attorney trust accounts.

Tax ID & Account Name

All IOLTA accounts should use IOLTA's tax ID number. The interest earned on these accounts should not be reported as income of the lawyer or law firm. NC IOLTA is tax-exempt. If possible, please do NOT issue a form 1099. If a 1099 must be generated, please make sure the account name that is associated with the tax ID number reads as follows:

BOARD OF TTEES OF THE N CAROLINA ST
BAR PL FOR INT ON LAWYERS TR ACCT

This name should not appear on the trust account checks.

Attorneys can use identifying names on their accounts and checks, such as Real Estate Trust Account, General Trust Account, etc. IOLTA, IOLTA Trust Account, etc. should not be printed on the checks as part of the account name.

Feel free to contact the IOLTA staff if you have any questions about opening an IOLTA account.

Remitting on NC IOLTA Accounts

Remittance:

Interest should be remitted to IOLTA monthly or quarterly. Payment on multiple accounts can be combined into one check or transfer. Interest can be mailed to IOLTA or remitted through the ABA Clearinghouse to:

Bank of America
Raleigh, NC
ABA #053000196
For Deposit to IOLTA Board of Trustees Account #041259235

Reporting:

The following information must be provided for each IOLTA account:

Account Name / Account Number / Gross Interest / Gross Service Charge / Net Interest / Interest Rate / Average Principal Balance / Earnings Period

Two report forms are available (Download PDF Remittance Form — Download Excel Spreadsheet Remittance Form); however, a computer-generated report can be substituted if all required information is included. Please report on an account even if no interest was earned or paid during the period. In addition, please note if an account has closed.

Electronic, paperless reporting is available. Contact the IOLTA office to determine which method of electronic reporting is best suited for your operational procedures.

Service Charges:

Rules governing attorney conduct prohibit an attorney from benefitting from funds held or managed on behalf of clients. (See 27 NCAC 2 1.15)

It is permissible for banks that do not waive service charges on IOLTA accounts to deduct from interest or utilize earnings credit for routine service charges associated with the account. Routine service charges include monthly account maintenance charges, per item check or deposit charges, etc.

Business costs or costs billable to or properly supportable by others are the responsibility of the law firm and should not be charged against client funds in the account or against the interest or the earnings credit of an IOLTA account. These charges may be deducted from the firm’s operating account, billed to the firm, or deducted from funds maintained or deposited by the lawyer in the IOLTA account for that purpose. Examples of such costs include but are not limited to check printing, NSF/OD fees, stop payment orders, wire transfer fees, account reconciliation, remote capture capability, on-line banking, digital imaging, CD-ROM statements, or interest charged on uncollected balances (float).

If the total of permissible service charges on an IOLTA account is greater than the interest earned, the difference may be deducted from the total remitted by the bank.

No trust account, whether it is IOLTA or not, can be linked to an operating account to utilize the collected trust account balances to offset charges or fees attributable to operating accounts (see NC State Bar RPC 150).

Bank Recognition:

In recognition of the public service provided by NC IOLTA, many banks enhance their IOLTA account product by offering a higher interest rate and/or by waiving service charges. These banks are recognized on the Bank List found on the State Bar’s website. The list is also published annually in the State Bar Journal, which is distributed to every NC licensed attorney. Significant changes in bank policies on IOLTA accounts are reported in the Journal quarterly.

Methods for banks to obtain CRA credit or recognition as a result of higher interest rates paid or lower service charges assessed are under development and discussion with bank regulators.

Feel free to contact the IOLTA staff if you have any questions about opening an IOLTA account.

NC IOLTA
PO BOX 2687
Raleigh, NC 27602

208 Fayetteville Street
Raleigh, NC 27601
919-828-0477
888-828-1718 (Fax)
iolta@ncbar.gov