What is a trust account?
A trust account is a bank account, but it is separate from my regular business bank account. I put any money you give me into the trust account. The money still belongs to you, and you are trusting me to keep it for you. If I betray that trust, I will get into a lot of trouble, because I have taken your money without permission.
The trust account earns a bit of interest every month. That interest does not go to you or me, though. Instead, the state Supreme Court has ordered that all of the interest from all lawyers’ trust accounts in the state gets pooled together into a special fund, which then helps provide legal services for low-income people. Although is only a few pennies a month for all of my clients, it is several million dollars for legal services when it all gets pooled together.
This program is called “Interest on Lawyers’ Trust Accounts,” or IOLTA. I sometimes call the trust account “IOLTA,” but it’s the same thing.
Why do I need to use a trust account?
You don’t, but I do. Lawyers have to follow certain ethical rules *link to rules*, called the Rules of Professional Conduct, and those rules require lawyers to have a trust account and to put client funds in it.
Normally, clients put money in their account before I do the work. This is to make sure that the clients will actually pay. Until I do the work, the money belongs to the client, even though it is sitting in the trust account. At any time, if you want your money back, just tell me and I will send it to you.
Once I do the work and bill you for it, the money becomes mine. I transfer it out of the trust account and into my own account. If there is money remaining in the trust account after that, it will stay there until I do more work for you. If there is not enough money in the trust account to cover my bill, you owe a debt to me. You can pay down that debt by making the minimum monthly payments that we agreed to in your contract, until it is all paid off.
If you ever want to pay by credit card, click *here* for English or here for *Spanish*.
Can’t I just pay you?
Yes. It’s my job to deal with all of the bookkeeping, not yours.
So, how much do I owe?
Your balance is on every monthly invoice, including the details of transactions into and out of the trust account, how much you have in there, and how much you owe me, if anything. If you have any questions, please contact Ella or me right away. I want to make sure you always know exactly where your money is going.