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Other Organizations : NLTAF/IOLTA : FAQs
THE
AMENDED IOLTA RULE
The Nebraska
Supreme Court adopted the conversion of the voluntary Interest On
Lawyers Trust Accounts (IOLTA) Program to Opt-out Program in December
1992. The Opt-out Program will became effective January 1, 1993.
Under the Code of Professional Responsibility, Disciplinary Rule
9-102, every attorney trust account will be converted to an interest-bearing
account. A lawyer or law firm wanting to opt-out must file a Notice
of Declination with the Chief Justice of the Supreme Court or his/her
designee for that year. This brochure has been created to help answer
questions that may arise with the new program.
Q.
What is the new Opt-out IOLTA Program?
A. The new program will require all lawyers who practice
in Nebraska and hold client funds in trust accounts to place their
"pooled" nominal and/or short term non-interest bearing client trust
accounts into interest-bearing IOLTA accounts. Those lawyers or
law firms who do not "opt-out" of the program by February 15 of
each year will be automatically enrolled in the program.
Q.
Does this type of IOLTA program exist today?
A. Yes. There are currently 50 IOLTA Programs in the United
States - 21 states are Opt-out Programs, 3 states are Voluntary
Programs, and 26 states have Mandatory Programs.
Q.
What must lawyers do to comply with the Opt-out IOLTA Program?
A. Annually, a Trust Account Certification form must be completed
and returned to the Nebraska Lawyers Trust Account Foundation by
February 15 of each year. Once the form is returned, there will
be no additional steps required to participate in IOLTA.
Q.
What if I do not have a commingled non-interest bearing client account?
A. Those lawyers who do not hold client funds in a commingled
non-interest bearing client trust account are exempt from the provisions
of this new Rule. There will be an area on the Trust Account Certification
form which will allow for indicating this exemption.
Q.
What if I already have joined the IOLTA Program?
A. Those lawyers or law firms who currently participate in
the IOLTA Program will also be required to fill out the Trust Account
Certification Form.
Q.
How will the Opt-out IOLTA Program affect current trust fund practices?
A. This program will impose no new burdens upon lawyers.
Lawyers have always exercised their discretion in determining whether
a client's trust deposit was of sufficient size or duration to justify
placement in a separate interest-bearing account, with the interest
payable to the client. Lawyers will retain this discretion and continue
to make these fiduciary decisions under the Opt-out Program.
Q.
Can lawyers still deposit individual client funds into accounts
which pay interest that can be passed on to the client?
A. Yes. Lawyers are expected and encouraged to continue the
customary practice of establishing separate, interest-bearing accounts
for individual clients' funds when the sum is large enough or the
duration is long enough to justify the cost of opening, administering,
and closing the account. Any interest accrued becomes the property
of the client. If clients request their money be placed in a separate
trust account, the lawyer is ethically bound to fulfill the clients'
request.
Q.
How much lawyer time and money will participating in IOLTA involve?
A. No time and no money. The mechanics of converting to an
IOLTA account are simple. Yearly, a Trust Account Certification
form will be mailed out to all active Nebraska lawyers. Once completed,
no further effort is required by the lawyer.
Q.
What if I wish to "opt-out" of the program?
A. If you choose not to participate in the program, a written
Notice of Declination will needed to be filed with the Chief Justice
or his/her designee of the Supreme Court by February 15th each year.
Q.
Is there a notice of Declination form?
A. No. There is no designated or established form for a lawyer
to use in filing his or her Notice of Declination. Rather, a lawyer
desiring to opt-out must prepare his or her own form of Notice of
Declination and mail it in letter form to the Chief Justice.
Q.
Who pays the service charges or fees for the IOLTA account?
A. Bank service charges are paid from the interest earned
by the IOLTA account. Under no circumstances is the account principal
changed by IOLTA involvement, nor the lawyer billed for IOLTA produced
expenses.
Q.
What if my account balance is low?
A. Lawyers need not be concerned with this issue. IOLTA reserves
the right to exempt from active IOLTA participation those trust
accounts with small balances that will cost the IOLTA Program more
in service charges than will be generated in interest by the account.
Either way, there will be no difference in the way the lawyer operates
the trust account.
Questions
about the program may be directed to:
Doris J. Huffman
Executive Director
Nebraska Lawyers Trust Account Foundation
Roman L. Hurska Law Center
P.O. Box 95103
Lincoln, Nebraska 68509
(402) 475-1042
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