For attorneys

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 PDF.

Overdraft reporting

Lawyers who are licensed in Wisconsin are required to authorize their financial institution, by written Agreement PDF, 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, 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) 261-8296 or toll-free at (877) 315-6941, Option 2.

The Wisconsin Supreme Court established trust account overdraft reporting requirements in Wisconsin, effective January 1, 1999. See, SCR 20:1.15(h) PDF [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) PDF. 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

Trust Account Options as of July 1, 2016: The 2016 trust account rule provides lawyers and law firms with several options for their IOLTA trust accounts. In determining which option will work best, a lawyer or law firm should first identify the types of transactions that are currently being used and those that the lawyer or law firm would like to use in the near future. The types of transactions that are now permitted include: remote deposits; electronic transfers (ACH transactions); credit, debit and pre-paid cards; checks, wire transfers, and teller deposits.

Each of the options under the 2016 rule offers a different approach to safeguarding funds in trust, and is based on the types of transactions that the lawyer wants to use. The three options include: 1) a stand-alone, traditional IOLTA, in which electronic transactions are prohibited; 2) an E-Banking IOLTA Trust Account which permits electronic deposits and disbursements and requires maintaining a second account that is a traditional IOLTA; and 3) an Alternative to the E-Banking Trust Account, which permits checking and electronic transactions within a single IOLTA account. Read more PDF.

Supreme Court re-creates trust account rule; amends related rules: On April 4, 2016, the Wisconsin Supreme Court repealed and re-created SCR 20:1.15—Safekeeping property; trust accounts and fiduciary accounts, and amended SCR 20:1.0, SCR 20:1.5 and SCR 22.39, effective July 1, 2016. Order, Petition No. 14-07. The changes to SCR 20:1.15 will expand the use of electronic transactions in trust and fiduciary accounts beyond the current limits of accepting payments for legal fees and costs, and collecting debts. Read more PDF.

Scam alerts
June 2016 - There are a growing number of scams that target lawyers, law firms, and client trust accounts. The scope and sophistication of these scams is constantly evolving and may focus on any type of representation where a lawyer is hired to assist in the transfer or collection of money, e.g., real estate and other transactions, collection matters, and collaborative law agreements in family law matters. Read more Adobe PDF

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 PDF format):

Management of a trust account

OLR has prepared a Trust Account Manual PDF to assist lawyers and law firm staff in managing trust accounts. The 2016 manual provides basic information regarding the 2016 trust account rule as well as guidance on properly handling client and third party funds and keeping appropriate records.

Education

September 30, 2016 seminar

For further information, contact Mary Hoeft Smith, Trust Account Program Administrator, by phone at (877) 315-6941 or e-mail at mary.hoeftsmith@wicourts.gov.

Resources

Ethics opinions and published articles on trust account issues