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FAQ

FAQ for IOLTA/IOTA

FAQ Concerning Attorney Registration

FAQ for IOLTA/IOTA Rules

FAQ for Electronic Funds Transfer for IOLTA/IOTA Proceed Payments

What is IOLTA/IOTA?

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 3953.231 and 4705.09 and 4705.10.

How does it work?

Prior to this program, lawyers and title agents placed nominal or short-term deposits into pooled, non-interest bearing accounts for two primary reasons: 1) a prohibition from collecting interest on client funds for themselves, and 2) the cost of establishing individual accounts for deposits of escrow funds outweighs the gain of any interest earned. 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.

When should I place client funds in my IOLTA account?

IOLTA accounts are only intended to be used whenever net interest cannot be earned for the client's benefit (i.e., the funds are nominal in amount or are to be held for a short period of time and thus can not generate sufficient interest above the cost to open and maintain the account). If net interest could be earned for the client, then the funds should be deposited in a separate account for the client's benefit.

What types of client funds should go into an IOLTA or IOTA account?

Examples of the types of funds to be placed into these trust 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

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.

What about flat-fee agreements and retainer fee agreements?

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, the Code of Professional Responsibility, 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. Op. 96-4 - Flat fee in criminal defense representation deposited into business account.

Who must have these accounts?

Lawyers:
Every lawyer licensed to practice in the state of Ohio who receives client funds (filing fees, unearned retainers, settlements, etc.), and maintains a pooled funds escrow account must establish it as 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 IOLTA or IOTA account.

Where do I establish an IOLTA or IOTA account?

An attorney 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. In order for a bank to participate in the program, it must comply with the Rules established by OLAF for the administration of the program. You may contact OLAF 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.

How do I establish an IOLTA or IOTA account?

New IOLTA and IOTA accounts must be established at, or existing accounts converted to, an eligible, participating financial institution. The participating bank should have a uniform process for establishing a new IOLTA or IOTA account that complies with the Rules established by OLAF for the administration of the program. 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. When establishing a new account, the attorney has the responsibility to ensure that the new account will provide the greatest return possible and that only reasonable service charges will be applied to the account. Finally, once an account is established, the attorney must notify OLAF by using the IOLTA/IOTA Registration Form. While the registration form is not a prerequisite to establishing an account, the attorney register the account on-line or complete and return the form once the account is established in order to complete the process for establishing a new account. The registration form is only for the purpose of notifying the Foundation that an account has been established. It does not by itself establish an account.

May I use a credit card to accept payment from a client?

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 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.

When and how is notification of a new account provided to the Foundation?

Once an account is established at a participating bank, the attorney must notify OLAF by use of the IOLTA/IOTA Registration Form. The registration form is only for the purpose of notifying the Foundation that an account has been established. It does not establish an account. Lawyers do not need to notify the Supreme Court of Ohio when establishing an IOLTA or IOTA account. Account information will be requested by the Court during its biennial registration.

Who sends in the interest these accounts earn?

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.

Whose tax identification number should be used?

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.

What do I do with client funds in my IOLTA when I am unable to locate the client?

The Supreme Court of Ohio's Board of Commissioners on Grievances and Discipline has offered the following informal, nonbinding opinion Advisory Opinion from the Supreme Court of Ohio on this question:

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's Division of Unclaimed Funds 77 South High Street , 20th Floor Columbus , OH 43215-6108 webunfd@com.state.oh.us (614) 466-4433 Division of Unclaimed Funds

Are the funds in my IOLTA or IOTA insured from loss if something happens to the bank?

The Federal Deposit Insurance Corporation (FDIC) in August 2009 announced that it has extended the time in which client funds deposited in IOLTA accounts at participating financial intuitions are eligible for unlimited deposit insurance coverage as part of the Temporary Liquidity Guarantee Program (TLGP). All funds in an IOLTA account, regardless of size, will now be insured in full by the FDIC and backed by the full faith and credit of the United States Government, as part of the Temporary Account Guarantee (TAG) provisions of the TLGP. Financial institutions opting out of the TAG coverage must display a notification to customers. The additional coverage is in effect until June 30, 2010, unless extended. Full text of the final Rule can be found at: http://www.fdic.gov/news/news/financial/2009/fil09048.html

We encourage you to contact your financial institution to determine whether it has opted-out of the TAG program or if it is participating. Also remember that any fees the financial institution may assess for its participation in the TAG program are not eligible for deduction from the interest earned on your IOLTA account.

Finally, the FDIC rule specifically states that "Accounts commonly known as Interest on Lawyers Trust Accounts (IOLTAs) (or functionally equivalent accounts)" are included in the TAG program. The notes and comments to the rule focus on IOLTA as accounts held by an attorney or law firm for its clients. There is no specific discussion of IOTAs, as established in Ohio, which are pooled, client trust accounts for real estate escrow closings held by both attorneys and non-attorneys - although the notes and comments to the rule do use interchangeably IOLTA, IOTA, and IOLA. It is the opinion of the Foundation that client funds deposited in an Ohio IOTA account at participating financial intuitions are eligible for unlimited deposit insurance coverage as part of the Temporary Liquidity Guarantee Program (TLGP), as long as interest from the account does not inure to the benefit of the title insurance agent or agency or clients (and thus making it the equivalent of a non-interest-bearing transaction account).

FAQ Concerning Attorney Registration

Do I need to register my IOLTA account?

Yes, state law and the Supreme Court of Ohio's rules require attorneys licensed in the state to register their IOLTA accounts with the Court.

How do I register my IOLTA account?

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 accounts. In between biennial registrations, the attorney may register new accounts and/or provide account updates by visiting the Ohio Legal Assistance Foundation's Web site or contacting the Foundation directly.

What information do I need to provide to the Court regarding my IOLTA account?

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 accounts with which you are associated.

May I use my employer's IOLTA account or do I need my own?

If you are working for a firm and that firm maintains an IOLTA account, you are permitted to use your firm's IOLTA 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 account 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.

If I do not need an IOLTA account what do I need to do?

In the IOLTA section of the Certificate of Registration, please check the appropriate box at the bottom of the form indicating the reason that you do not need to maintain an IOLTA account ' no additional information or steps are required. Return to FAQs Concerning Attorney Registration

FAQ for IOLTA/IOTA Rules

What are the Rules and what is their effect?

On September 6, 2001, the Ohio Legal Assistance Foundation (OLAF) Board of Trustees adopted the final set of Rules governing Interest on Lawyers' Trust Accounts (IOLTA) and Interest on Trust Accounts (IOTA) in the state of Ohio. The adoption of these Rules followed extensive publication, notice, comment opportunities, and a public hearing. The effective date of implementation for the Rules is April 1, 2002. The effect of the new Rules is the modification and adoption of past policies and practices of OLAF and the Ohio Public Defender's Office, which administered the legal aid fund prior to the creation of OLAF. Finally, the Rules are designed to ensure that participating banks provide products that are reasonable, equitable, and in compliance with public policy. Follow this link for additional general information on the Rules.

What do the Rules mean for me as an attorney?

The Rules require each attorney, law firm, legal professional association, or ancillary business related to the practice of law in which the attorney is a principal, which deposits client funds in a common escrow or trust account, to establish and maintain an IOLTA or IOTA account in an eligible, participating bank. The Rules prescribe when and how the attorney must establish the account and how to notify OLAF once the account has been established. The Rules also require that the depositing attorney cooperate with and assist OLAF to ensure that the deposits are maintained in an account providing the greatest return. Finally, the Rules summarize the consequences for an attorney who fails to comply with these provisions.

Is my bank an "eligible, participating financial institution" as required by the Rules?

The Rules require that attorneys maintain their IOLTA and IOTA accounts at an eligible, participating financial institution. Any bank, savings & loan association, credit union, or savings bank that is authorized to transact business in the state of Ohio may participate in the IOLTA/IOTA program. Most, but not all, financial institutions in the state currently do participate. In order for a bank to participate in the program, it must comply with the Rules established by OLAF for the administration of the program and the applicable sections of the Ohio Revised Code. You may contact OLAF to confirm whether the bank where your account is currently maintained is an eligible, participating bank.

Is my account "providing the greatest return possible" as required by the Rules?

Generally, accounts with regularly high deposits, such as those greater than the $50,000 to $100,000 range, should earn rates commensurate with those paid on business investment, money market, or sweep account products. If you are not sure if your bank is providing the greatest return possible, first, talk with a representative from your current bank to obtain what rates the bank is paying on it other business investment, money market, or sweep account products. If your account is not commensurate with these rates, then ask your bank to increase the rate on your account to be commensurate with these rates. Most banks will be more than willing to work with you in order to retain your business. Second, if your current bank is not willing to provide a commensurate rate, then shop around in your community for banks that will offer you such a rate. This Web site also provides advice on choosing a financial institution for your account. Finally, you may contact OLAF to obtain assistance to ensure that your bank does provide the greatest return possible.

What about service charges?

Financial institutions may waive service charges on IOLTA/IOTA accounts. If such charges are not waived, only reasonable service charges may be deducted from the interest earned on the account. Reasonable service charges include normal monthly maintenance fees or deposit and check transaction charges. If the interest is insufficient to cover the charges, and the institution does not waive the difference, the named account owner is responsible for the balance. Charges for services such as check printing, overdraft penalties/protection, electronic transfer fees, stop payment fees, return deposit fees, credit card brokerage fees, etc., are the account owner's responsibility and may not be deducted from the interest earned. The account holder may deposit such additional funds into the account as may be necessary to cover charges in excess of interest earned, or to meet a minimum balance requirement by the financial institution that would enable waiver of all service charges.

Is my IOLTA or IOTA account in compliance with the Rules?

Your account is in compliance with the Rules if it is at an eligible, participating financial institution, providing the greatest return possible and that only reasonable service charges are applied. After reading the material on this Web site and the Rules, if you are not sure if your account is in compliance, then contact your bank to discuss these points. In order to retain your business, most banks are more than willing to meet with you and make the necessary adjustments to your account. If, after meeting with your bank, you are still not sure if your account is in compliance, then contact OLAF to discuss any concerns or questions that you may have. Return to FAQs for IOLTA/IOTA Rules

What if my IOLTA or IOTA account has a small average monthly balance?

For an account with an average monthly balance below $10,000 or that almost never goes above $50,000, the account interest rate specific provisions of the Rules do not apply. However, the bank at which the account is located must still be an eligible, participating financial institution applying comparable rates, and only reasonable service charges may be deducted to your account. If your account maintains an average monthly balance below $10,000 or almost never goes above $50,000, then you are still encouraged to negotiate with your bank for the greatest return possible.

What do the Rules mean for me as a financial institution in the state of Ohio?

The thrust of the rules is to ensure that participating financial institutions provide products and rates for IOLTA/IOTA deposits that are reasonable, equitable, and in compliance with public policy. Generally, accounts with regularly high deposits such as those greater than the $50,000 to $100,000 range should earn rates commensurate with those paid on business investment, money market, or sweep account products. The rules also make explicit a policy on allowable service charges applicable to both IOLTA and IOTA accounts. If your financial institution utilizes computerized systems to generate required monthly IOLTA/IOTA reports, then the Rules require that these statements be transmitted electronically. Finally, the Rules require a financial institution be "eligible" to participate in the IOLTA/IOTA program. An eligible institution is one that has certified to OLAF that it is in compliance with the Rules. The certification process includes verification that the bank's IOLTA/IOTA accounts are providing the greatest return possible, that only reasonable service charges are applied, that the accounts are established properly by the bank, and that the bank is remitting net interest and account information in a timely and proper manner. The Rules require OLAF to maintain a list of IOLTA/IOTA-eligible institutions. Please contact OLAF to confirm whether your bank is eligible.

FAQ for Electronic Funds Transfer for IOLTA/IOTA Proceed Payments

What is EFT (electronic funds transfer)?

The transfer of funds initiated by electronic means. It authorizes a financial institution to debit or credit bank accounts, when authorized by the account owner.

How do I sign up for EFT?

To register for the EFT program, simply complete the Treasurer of State's EFT Authorization Agreement. Return your completed application form to the Treasurer of State.

How do I get an application for EFT?

Contact the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number). You can also download the application and instructions from our Web site by following this link.

What payment options are available using ACH?

ACH Credit and ACH Debit.

What is ACH Credit?

An ACH Credit is an electronic funds transfer transaction in which the financial institution sends funds to the Treasurer of State's account. This process occurs through the ACH Network and requires that your institution be an ACH Originating Financial Institution. Through the ACH Credit option, you to initiate ACH transfers using the National Automated Clearing House Association (ACHA) Convention Cash Concentration or Disbursement Plus format (CCD+) in the TXP Payment format.

What is ACH Debit?

An ACH Debit is an electronic transaction in which a financial institution authorizes the Treasure of State to withdraw funds from the institution's account and deposit them into the Treasurer of State's account. The financial institution initiates and specifies the amount and date of the withdrawal by calling a toll-free number at the Treasurer of State. There is no cost to you. No software. No transmission charges.

How long does it take to enroll in EFT?

If you select the ACH Debit method, the Treasurer of State will send you a letter after you have completed Treasurer of State's EFT Authorization Agreement. The registration process for this method can take up to 30 days. The registration time will include a test where we issue a request to debit your account, but for zero dollars, to ensure the banking information is accurate. If you select the ACH Credit method, the Treasurer of State will send you a letter and provide you with the state's bank account number and the ABA routing /transit number necessary to initiate an ACH Credit transaction.

What does ACH mean?

ACH means Automated Clearing House. ACH is the financial network run by the Federal Reserve to transfer funds electronically. ACH is widely used by the financial community to transfer funds, for example, for the direct deposits of wages and social security payments. Follow this link for additional information about ACH.

Are there safeguards to prevent the department or others from initiating incorrect payments?

Yes. The Treasurer of State will initiate a transaction with the taxpayer's bank only after receiving instructions from a financial institution. The two banks will not initiate an ACH Debit without the taxpayer's identification number (BIN) and the taxpayer's personal identification number (PIN).

How can I verify my payment has been made?

If you are using the debit method, record your confirmation number. You can verify after the transfer date that the transfer occurred. If you are using the credit method, your confirmation number maybe used to trace a transaction if a payment is not received by the Treasurer of State. For either method, the Treasurer of State will accept as proof of payment a copy of the taxpayer's bank statement or other bank records that (1) identifies the Ohio Treasurer of State as the payee, (2) shows a withdrawal from an account with a sufficient level of funds to cover the taxpayer's deposit, and (3) that the payment had not been reversed or returned. If you need further assistance you may call the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number).

What fees are involved in using EFT?

There are no fees involved if you use the ACH Debit method. If you use the ACH Credit method there may be costs depending on what ACH origination services are offered and the corresponding costs.

Can I withdraw from the EFT program?

The Foundation may grant you a waiver from the EFT requirement if it is determined that your financial institution is unable to execute either ACH Debit or Credit methods of payment.

Once I'm signed up for EFT, how do I initiate changes?

You must complete and return a new application form to the Treasurer of State. You can download the EFT Authorization Agreement or contact the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number) for a new application. All information requested on the form must be provided for any change you are making. Keeping the information for your EFT transactions current is very important. Certain critical information, such as your bank account number, must be correct in order to correctly initiate a transfer.

Is there someone I can call for help?

Yes. You may call the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number) or the Ohio Legal Assistance Foundation at (800) 877-9772 (toll-free number).

I got a confirmation number when I used TelePay. What is it for?

It's a number that's given to you each time you successfully complete a TelePay transaction for an ACH Debit payment. It can be traced back to the payment you made. It also serves as proof of your payment. Always record your confirmation number.

What is a pre-note?

A pre-note is a test method used to ensure that the pathway between the financial institution's account and the Treasurer of State's account is clear. The Treasurer of State's bank handles the pre-note for ACH Debit transactions while the financial institution handles the pre-note for ACH Credit transactions.

For ACH Credit, how do I get a copy of the record layout?

After the Treasurer of State has received and processed your ACH Credit application, you will be sent a confirmation letter. Included with that letter will be the information about the state's bank account you will need to complete an ACH Credit transaction. The basic layout for the Entry Detail Record and Addenda records are included in this letter. For additional information on ACH Credit Detail and Addenda Record formats, please refer to the 2003 ACH Operating Rules & Guidelines.

After I sign up for EFT, can I make a payment by check?

Yes. However, we prefer that you continue paying by EFT. Please contact the Foundation if this need arises.

What if I make a mistake on my EFT payment?

If you make a mistake during your TelePay call, you are allowed three attempts to enter the correct information. The amount you enter is always read back to you for verification. If you've entered your amount incorrectly, follow the instructions given to make corrections. If you make three mistakes on one call, your call will end. You will need to make another call. If you inadvertently paid more than you intended, call the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number) to get instructions. You may also be able to apply the funds to another period. Existing procedures for refunds will be followed.

What if I can't reach TelePay?

If you have trouble accessing the system, call the Treasurer of State at 1-877-EFT-OHIO (1-877-338-6446) (toll-free number).