Open an IOLTA Account
IOLTA accounts are interest-bearing general trust accounts, from which banks forward the interest net of service charges to the State Bar’s IOLTA program. The IOLTA program uses the money to fund law-related charitable causes. ALL general client trust accounts of a North Carolina lawyer or law firm must be IOLTA accounts. Dedicated lawyer trust accounts (interest-bearing accounts maintained for the sole benefit of a single client or transaction) should not be established as IOLTA accounts.
Operating accounts should not be established as IOLTA accounts.
Trust Account Rules
The procedures and rules governing all lawyer trust accounts, including NC IOLTA accounts, are established by the North Carolina State Bar. For more information about the trust account rules, contact the NC State Bar at 919-828-4620 or refer to the Trust Account Handbook on the NC State Bar website.
As of July 1, 2010, all NC IOLTA accounts must be held at “eligible” banks. These banks are published in the NC IOLTA Eligible Bank List.
Lawyers must provide documentation to NC IOLTA when opening (or closing) IOLTA accounts; however, lawyers do not need authorization from NC IOLTA to open an IOLTA account. Documentation can be provided by submitting the NC IOLTA Status Update Form. The NC IOLTA Status Update Form is available online or from the NC IOLTA office.
The Bank Directive on NSF Trust Checks is required by the NC State Bar for ALL lawyer trust accounts. The NSF form can be found on the State Bar’s website.
A copy of this form should be submitted to the bank and maintained by the law firm.
The IOLTA account name should clearly identify the lawyer/law firm as the owner of the account. Lawyers can use identifying names on their accounts and checks. For example, an appropriate title for a general trust account might be "The Trust Account of John Smith, Attorney," "Smith, Jones & Williams Real Estate Trust Account” or "Smith, Jones & Williams IOLTA Account."
Tax ID & 1099s
NC IOLTA accounts should use NC IOLTA’s tax ID number. Please contact the NC IOLTA office for the tax id number.
Eligible Banks may elect to waive any or all service charges on IOLTA accounts. If a bank does not waive service charges on IOLTA accounts, allowable reasonable service charges may be assessed but only against interest earned on the IOLTA account. See NC IOLTA Rule .1316(e).
All service charges other than allowable reasonable service charges assessed against an IOLTA account are the responsibility of and shall be paid by the lawyer or law firm. These charges may be deducted from the firm’s operating account, billed to the firm, or deducted from funds maintained or deposited by the lawyer in the IOLTA account for that purpose. Business costs or costs billable to others are the responsibility of the law firm and should not be charged against client funds in the account or against the interest or the earnings credit of an IOLTA account. Examples of such costs include but are not limited to check printing, NSF/OD fees, stop payment orders, wire transfer fees, account reconciliation, remote capture capability, online banking, digital imaging, CD Rom statements, or interest charged on uncollected balances (float).
Rules governing lawyer conduct prohibit a lawyer from benefiting from funds held or managed on behalf of clients. See 27 NCAC 2 1.15-2(j).
No trust account, whether it is IOLTA or not, can be linked to an operating account to utilize the collected trust account balances to offset charges or fees attributable to operating accounts (see NC State Bar RPC 150).
Feel free to contact the NC IOLTA staff if you have any questions about opening an IOLTA account.