Trust Account Program
The OLR Trust Account Program has two primary goals: 1) to identify problems in the management of client trust accounts and other fiduciary accounts, and potentially, to prevent conversions from such accounts; and 2) to educate lawyers with respect to safeguarding funds and maintaining the required records. For further information, please see the Trust Account Program Annual Report  .
Overdraft reporting
Lawyers who are licensed in Wisconsin are required to authorize their financial institution, by written Agreement , to notify the Office of Lawyer Regulation of overdrafts on trust and fiduciary accounts from which they or a member or employee of their firm can disburse funds via check. The Agreement to Notify OLR of Overdrafts on Lawyer Trust Accounts and Fiduciary Accounts, along with guidelines on Proper Identification of IOLTA Trust Accounts and Proper Formatting of Trust Account Checks are found at the Agreement link above, and may also be obtained by contacting OLR's Trust Account Program at (608) 267-7274, Ext. 2 or toll-free at (877) 315-6941, Ext. 2.
The Wisconsin Supreme Court established trust account overdraft reporting requirements in Wisconsin, effective January 1, 1999. See, SCR 20:1.15(h) [formerly SCR 20:1.15(i) – (p)]. Pursuant to SCR 20:1.15(h)(3), whenever a check is presented against a lawyer's trust account or fiduciary account that has insufficient funds to cover that check, the financial institution must report the overdraft to OLR, regardless of whether or not the financial institution pays the check or returns it due to insufficient funds.
With respect to fiduciary accounts, the Court established limited alternatives to the overdraft reporting requirements of SCR 20:1.15(h) in SCR 20:1.15(j)(9). Those alternatives are: 1) an annual audit of the fiduciary account by an independent CPA or 2) a responsible co-signatory, such as a co-personal representative or co-trustee, for all disbursements from the fiduciary account. These alternatives do not apply to trust accounts.
In the news
New IOLTA rules, effective January 1, 2010
On January 1, 2010, a number of amendments to the trust account rule, relating primarily to income requirements for IOLTAs, took effect. See, SCR 20:1.15 .
Under newly enacted SCR 20:1.15(a)(7m), an IOLTA account must be held at an "IOLTA participating institution." De Ette Tomlinson, executive director of the Wisconsin Trust Account Foundation (WisTAF) indicates that virtually all of the financial institutions at which IOLTAs have been held in the past have agreed to comply with the new IOLTA requirements. In addition, WisTAF has now posted a list of the participating institutions on its Web site, pursuant to SCR 20:1.15(cm)(2)c. http://wistaf.org (external link).
In conjunction with the new IOLTA requirements, OLR suggests that lawyers and law firms do the following:
- Review the list of financial institutions on WisTAF's Web site and verify that their IOLTA account is at an IOLTA Participating Institution. (To view the list, go to the "Attorneys" menu at the above-referenced link to WisTAF's Web site.); and
- Confirm that their pooled trust account is an IOLTA account. (To do so, review a recent monthly statement to determine if the account title includes any of the following words: "IOLTA," "WisTAF" or "Wisconsin Trust Account Foundation.")
If either of the above requirements cannot be verified, please contact WisTAF in Madison at: (608) 257-6845 or (877) 749-5045.
Topics of interest to lawyers
For guidance on proper handling of trust and fiduciary accounts; recordkeeping requirements; legal fees; and procedural information regarding OLR's Trust Account Program, including overdraft investigations, please use the following links:
Practice tips
For guidance on dealing with common trust account problems that occur in certain specialized practice areas, including bankruptcy, real estate, and personal injury, please use the following links (all in Adobe PDF format):
Management of a trust account
OLR has created a Trust Account Manual that provides basic information on proper recordkeeping, including a transaction register, sample ledger pages, and guidelines on handling the monthly reconciliations.
Education
Upcoming seminars on trust account management and the trust account rules:
Contact Mary Hoeft Smith, Trust Account Program Administrator, for further information. Telephone: (877) 315-6941, option 2; e-mail: mary.hoeftsmith@wicourts.gov
Resources
Ethics opinions and published articles on trust account issues
|
