Arizona IOLTA - Understanding IOLTA
August 7, 2012
The Interest on Lawyers trust Accounts or much known as IOLTA, was developed by the Federal Government. The reason why they developed this amazing program is in order to generate some funds that can be utilized for rendering civil legal services to the needy. In order for the funds to be put in the IOLTA account, the client has to pay for the services of an attorney. The money paid to the attorney will then directly go to the IOLTA account, especially if it is a small amount, or if the attorney will just hold it for a short time. If the funds paid by the client are a large amount, or it will be held by the attorney for a long time, the funds will not go to the IOLTA account. Arizona IOLTA and the IOLTA programs in the other states are truly generating good interest rate.Once the funds are being kept in the IOLTA account, that’s the time the process of generating interests will begin. Clients don’t have to worry about their money, because it will eventually go back to them. The interests on the other hand will not go to the lawyer’s pocket, but it will be allotted for the programs supported by the IOLTA, and one of these is providing civil legal services to the underprivileged.
The IOLTA accounts were first used in the United States in the year 1980’s, by the time the Congress made some modifications in the Federal Banking Laws. Before the modifications in the Federal Banking Law were made, banks denied paying interests on checking accounts. Because of this act of the banks, the attorneys during this time subjected the funds of their clients in ‘Non Interest Bearing Accounts’. In the year 1981, the state of Florida is the first one to implement the IOLTA program. Today, all of the states are already enforcing this amazing scheme.
Not all clients’ funds are subjected in the IOLTA account. If the client paid a large amount, the funds will be kept in an Interest Bearing Account, but the interest will go to the client. If the funds are only in small amounts, it will go to the IOLTA account, generate interests, and then the interests will be for various charitable works.
Posted by Law Firm. Posted In : Arizona IOLTA
Attorneys customarily accept funds from clients every now and then for safekeeping, whether it may be a payment for a legal work that is yet to be done or a money owed to a third party. If the money of the client is large enough to warrant an interest, it is deposited in a separate account. The interest earned from this account will be directly paid to the client. If Client’s money is small in amount and does not need to be held that long, it is deposited into a pooled interest-bearing acco...