What is IOLTA?

IOLTA is an acronym for Interest on Lawyers' Trust Accounts. Attorneys routinely receive funds to be held in trust for future use. Funds of a substantial amount or that are to be held for a long period of time are usually placed in an interest-bearing account for the individual client's benefit. If funds are small in amount or to be held for a short period of time, they are usually commingled in a non-interest-bearing checking account. This is done because the interest generated by these funds would not be enough to benefit the individual client.

The IOLTA program, authorized by the Utah Supreme Court in 1983, allows attorneys to hold interest-bearing accounts. The interest from these accounts is remitted at least quarterly to the Utah Bar Foundation, a charitable, tax-exempt entity.

Common Questions

Is my IOLTA account FDIC insured?

On November 20, 2008, the FDIC issued a ruling that provides unlimited coverage through December 31, 2009 to deposits held in IOLTA accounts. See the Executive Summary from the FDIC, page 7, for more information.

You can see a the full FDIC rule here. The IOLTA accounts are discussed at the beginning of page 19.

If you have additional questions on if a particular deposit is FDIC insured, please contact your local banker or Kim Paulding at the Utah Bar Foundation, 801-297-7046.

How does the Utah Bar Foundation use the interest?

The interest generated by the IOLTA program is used by the Utah Bar Foundation to make grants in the following categories:

1. To promote legal education and increase the knowledge and awareness of the law in the community.
2. To assist in providing legal services to the disadvantaged.
3. To improve the administration of justice.
4. To serve other worthwhile law-related public purposes.

Since the first grants of IOLTA funds were awarded in 1985, the Utah Bar Foundation has awarded over $5 million for charitable, law related purposes. The existence of IOLTA has allowed us to make progress in meeting the needs of the poor and disabled for civil legal services through funding of projects. The foundation has also funded projects to improve the administration of justice and to provide law-related education for the public.

The IOLTA program, authorized by the Supreme Court of Utah in 1983, allows attorneys to hold interest-bearing accounts. The interest from these accounts is remitted at least quarterly to the Utah Bar Foundation, a charitable, tax-exempt entity.

Do IOLTA programs operate elsewhere?

Yes. Florida established the first IOLTA program in the United States in 1981. Since that time, all 50 states have established successful programs. IOLTA programs also operate successfully in a number of Canadian and British jurisdictions.

What are the tax consequences of participation in the program?

There are none to the attorney or the client. The Utah Bar Foundation, which receives the interest income, is tax-exempt. The Internal Revenue Service stated in Revenue Ruling 81-209 that the interest earned on nominal and short term client advances, which is paid over to a bar foundation pursuant to a court-established program, is not included in the gross income of any client.

Learn how to comply with IOLTA rule or open an IOLTA account