Also known as: trustee's bank account · trustees bank account · trust account · fiduciary account
Written by attorneys — see sources below.
2 senses
A bank account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to cover bank service charges on the account.
A bank account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to cover bank service charges on the account.
Attorney Thaddeus Tran maintains a trustee bank account for client funds. The bank charges a monthly fee. Tran deposits one hundred dollars of his own money solely to cover those charges. No other personal funds enter the account.
Client Tobias Thomas pays attorney Tristan Thompson a twenty-thousand-dollar retainer before work begins. Thompson deposits the entire sum into the trustee bank account. Thompson withdraws portions only after earning the fees through completed work.
A savings bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The depositor retains full control during life and the balance passes to the beneficiary on the depositor's death.
Theresa Tucker opens a savings account at Twin Rivers Bank titled in her name as trustee for her niece Tamara Tan. Tucker keeps the passbook, makes deposits and withdrawals during her life, and intends the balance to pass to Tan upon Tucker's death.
A savings bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The depositor retains full control during life and the balance passes to the beneficiary on the depositor's death.
Each sense below has its own examples, sources, and questions.
Threshold Capital holds nominal client funds in a trustee bank account under Washington's IOLTA program. The interest generated is paid to the Legal Foundation of Washington rather than to the clients because the amounts are too small to earn net interest for each client.
In 1984, the Supreme Court of Washington adopted rules requiring lawyers to deposit client funds nominal in amount or expected to be held for a short period of time into IOLTA accounts. The interest earned is paid to the Legal Foundation of Washington for use in providing legal services to the indigent. Petitioner Allen Brown is a lawyer who maintains an IOLTA account, and petitioner Greg Hayes is one of his clients. In 1990, Hayes recovered a judgment in an action for nonpayment of overtime wages entitling him to a payment of $4,000 in attorney's fees that could not be paid immediately, so the funds were placed in an IOLTA account. In August 1996, Hayes made an earnest money deposit of $2,000 and a further payment of $12,793.32 in connection with a real estate purchase closed on August 30, 1996, with the money going into an IOLTA account. In May 1997, Brown made a payment of $90,521.29 that remained in escrow for two days, generating an estimated $4.96 in interest ultimately paid to the Foundation. In 1994, Brown and Hayes filed this action in the United States District Court for the Western District of Washington seeking a declaration that the IOLTA program violated the Fifth Amendment and an injunction against its continued operation. The District Court granted summary judgment to respondents after finding that petitioners could not make any net return on the interest accrued in the accounts. The Court of Appeals for the Ninth Circuit affirmed, and the Supreme Court granted certiorari.
View case3 common questions
A lawyer may deposit personal funds only in the amount necessary to pay bank service charges on the account. Any larger deposit violates the rule requiring separation of lawyer and client funds.
Advance fees and expenses must be deposited into the trustee bank account and may be withdrawn only as the fees are earned or the expenses incurred.
When the principal amounts are too small to generate net interest for individual clients, the interest may be paid to a legal services foundation under an IOLTA program without effecting a taking of client property.
Fanny A. Lattan died intestate in March 1900. Beginning in 1886 she and her sister Angelica Lattan each maintained numerous accounts at the Irving Savings Institution, some in their individual names and others titled in trust for named beneficiaries. It was her practice to draw from all these accounts at will, whether they were kept in her name as trustee or otherwise, and to close them and open others as she saw fit. She kept the pass books and no beneficiary named in any account ever drew therefrom except upon drafts signed by her. On January 2, 1886 she opened account number 42,728 by depositing $355, the entry reading "Fanny A. Lattan, trustee for Emile R. Lattan, depositor." Two further deposits were made in this account. Twelve drafts were drawn against it between January 1886 and July 1898. The account was closed by her individual draft on July 8, 1898 and the proceeds used to open two new accounts, one of which was titled in trust for Emile R. Lattan. On September 19, 1890 she opened account number 51,556 titled in trust for Emile R. Lattan with a $462.03 deposit drawn largely from other trustee accounts. She later added two more deposits before closing the account in November 1894 and transferring the balance to an account in trust for Lewis H. Lattan. Emile R. Lattan was the son of Lewis H. Lattan, who in 1884 had turned over property worth about $20,000 to his sisters Angelica and Fanny for management without instructions. No accounting was ever rendered to Lewis. Fanny never informed Emile of any of the accounts on which he later relied, and he learned of them only more than a year after her death. Of the thirty-one accounts she maintained across seven banks, she paid the closing balances to the named beneficiaries in only two instances; in all others, including the accounts involving Emile, she treated the funds as her own. Angelica Lattan was appointed administratrix of Fanny's estate and died on April 10, 1901, leaving the present administrator as sole representative. The personal property was inventoried at $32,950.08 and exceeded $40,000 at final distribution. Emile R. Lattan filed a claim against the estate asserting an interest in the trust accounts; the surrogate dismissed the claim on the merits. The Appellate Division reversed and allowed the claim, after which the Court of Appeals granted review.
View case1 common questions
A Totten trust is created when the depositor opens the account in the depositor's name as trustee for a beneficiary. The depositor retains control during life and the balance passes directly to the beneficiary on death without probate.
…to avoid commingling their clients' money with their own, but it is not unethical to pool several clients' funds in a single trust account. Before 1980 client funds were typically held in non-interest-bearing federally insured checking accounts. Because federal banking regulations in effect since the Great Depression…