What is the best way to mamage funds my daughter is receiving from a lawsuit?
Full Question:
Answer:
IOLTA stands for Interest on Lawyers’ Accounts—An IOLTA account is an interest-bearing account set up specifically to hold trust funds. The interest that accrues on an IOLTA account is given by the financial institution to a state bar foundation or other nonprofit legal organization for the good of the public. IOLTA accounts can usually be used only for client funds that are a nominal amount or that are expected to be held for only a short time.
The account is also used for distributing settlement funds, for instance. If a firm settled a case for $10,000, the opposing party would issue a $10,000 check payable to the law office and the client. The law office would deposit the $10,000 in the trust account. If the law office was entitled to $2,000 of the money, a trust check would be written to the client for $8,000, and a $2,000 check would be written to the law office itself (to deposit in its operating account).
Initially, Nevada’s program was opt-in. It allowed attorneys to deposit the client funds being held in trust into an account which paid the interest earned on that account to an agency charged with providing legal services to the poor. In 1992, the Nevada IOLTA program subsequently became an opt-out program, meaning an attorney had to take action to prevent interest on a trust fund from being distributed to the IOLTA designated agency. Finally, in May of 2008, the IOLTA program became mandatory, except for those funds that SCR 217 continues to allow to pay interest to the client (funds that are not “nominal or to be held for a short period of time”).
