FDIC CHANGES FOR LAWYER TRUST ACCOUNTS (IOLTA)
Washington State Bar Association Reports:
With Congress failing to take action to extend unlimited coverage, as of Jan. 1, 2013, FDIC insurance available to IOLTA accounts is limited to the standard amount of $250,000 per owner of the funds (client), per financial institution, assuming that the account is properly designated as a trust account and proper accounting of each client’s funds is maintained.
Since November 2008, a series of temporary federal laws have operated to provide unlimited FDIC deposit insurance coverage for most IOLTA accounts. For the past two years, IOLTA and non-interest-bearing accounts enjoyed unlimited FDIC insurance coverage under Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. That provision was effective for two years with a sunset date of Dec. 31, 2012.
Now, funds deposited in IOLTAs are no longer insured under the Dodd-Frank Deposit provision. Because IOLTAs are fiduciary accounts, they generally qualify for up to $250,000 in “pass-through” coverage (the insurance coverage passes through the fiduciary-depositor to the client-owner’s funds) on a per-client basis.
Read the entire article at Washington State Bar Association
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