Also known as: separate accounts · segregated account
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A bank account in which a lawyer maintains funds belonging to clients or third persons separate from the lawyer's own property. The account must be located in the state where the lawyer's office is situated unless the client or third person consents otherwise. Complete records of the account must be preserved for five years after the representation ends.
A bank account in which a lawyer maintains funds belonging to clients or third persons separate from the lawyer's own property. The account must be located in the state where the lawyer's office is situated unless the client or third person consents otherwise. Complete records of the account must be preserved for five years after the representation ends.
Select any source to read its text and confirm it supports the definition.
An account maintained separately from general funds to hold money belonging to another party or designated for a specific purpose.
Select any source to read its text and confirm it supports the definition.
An account maintained separately from general funds to hold money belonging to another party or designated for a specific purpose.
Each sense below has its own examples, sources, and questions.
Stella Shapiro received a $15,000 advance from a client for anticipated litigation costs. She deposited the full amount into her law firm's operating account instead of a client trust account. The client later demanded return of the unspent portion after the matter concluded without any expenses incurred.
Santiago Sanchez held small client settlement amounts in a pooled interest-bearing trust account. The interest generated went to a state legal-services program rather than to the individual clients because the amounts were too modest to justify separate accounts.
A lawyer must deposit advance fees and expenses into a client trust account and may withdraw them only as the fees are earned or the expenses are incurred. This requirement prevents commingling and protects client funds until the lawyer has performed the work.
Supporting sources
No. Client funds must be held in a separate account maintained in the state where the lawyer's office is located. Placing them in the operating account constitutes commingling and violates the duty to safeguard client property.
Supporting sources
A lawyer must keep complete records of all account funds and other client property for five years after termination of the representation. These records include deposits, withdrawals, and the purpose of each transaction.
Supporting sources
An IOLTA account is a pooled interest-bearing trust account used when client funds are nominal in amount or expected to be held only briefly. The interest earned is paid to a state program that supports legal services rather than to the individual clients.
Spencer Silver, a state education official, oversaw distribution of public money to church-affiliated schools. The schools were required to maintain separate accounts for the state funds and submit annual expenditure reports to prevent any use for religious instruction.
Simone Sanders, treasurer of a nonprofit corporation, maintained a separate account for voluntary employee contributions used to fund independent political broadcasts. The corporation's general treasury funds were never commingled with the separate political account.
Simon Stern, a union officer, established a separate account for members who voluntarily contributed to the union's political action committee. Dues paid into the general treasury were never transferred into the political account without affirmative member consent.
Sebastian Santos, a public-school teacher, objected to paying full union dues. The union placed the portion of his fees attributable to political activities into a separate account and refunded that amount to him at the end of the fiscal year.
…educational services, and provides that the funds are to be paid directly to the schools. The schools are required to keep separate accounts for the state funds and to make annual reports of their expenditures of those funds. The Act also requires that the Superintendent of Public Instruction approve the textbooks and other…