Also known as: trustee's bank account · trustees bank account · trust account · fiduciary account
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A bank account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to cover bank service charges on the account.
A bank account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to cover bank service charges on the account.
Attorney Thaddeus Tran maintains a trustee bank account for client funds. The bank charges a monthly fee. Tran deposits one hundred dollars of his own money solely to cover those charges. No other personal funds enter the account.
Client Tobias Thomas pays attorney Tristan Thompson a twenty-thousand-dollar retainer before work begins. Thompson deposits the entire sum into the trustee bank account. Thompson withdraws portions only after earning the fees through completed work.
A savings bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The depositor retains full control during life and the balance passes to the beneficiary on the depositor's death.
Theresa Tucker opens a savings account at Twin Rivers Bank titled in her name as trustee for her niece Tamara Tan. Tucker keeps the passbook, makes deposits and withdrawals during her life, and intends the balance to pass to Tan upon Tucker's death.
A savings bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The depositor retains full control during life and the balance passes to the beneficiary on the depositor's death.
Each sense below has its own examples, sources, and questions.
Threshold Capital holds nominal client funds in a trustee bank account under Washington's IOLTA program. The interest generated is paid to the Legal Foundation of Washington rather than to the clients because the amounts are too small to earn net interest for each client.
A lawyer may deposit personal funds only in the amount necessary to pay bank service charges on the account. Any larger deposit violates the rule requiring separation of lawyer and client funds.
Advance fees and expenses must be deposited into the trustee bank account and may be withdrawn only as the fees are earned or the expenses incurred.
When the principal amounts are too small to generate net interest for individual clients, the interest may be paid to a legal services foundation under an IOLTA program without effecting a taking of client property.
A Totten trust is created when the depositor opens the account in the depositor's name as trustee for a beneficiary. The depositor retains control during life and the balance passes directly to the beneficiary on death without probate.
…to avoid commingling their clients' money with their own, but it is not unethical to pool several clients' funds in a single trust account. Before 1980 client funds were typically held in non-interest-bearing federally insured checking accounts. Because federal banking regulations in effect since the Great Depression…