When placing funds in a trust account in a credit union, be sure that each owner of funds is a member or that the credit union is designated a "Low-Income Credit Union." The new requirement does not affect trust accounts in financial institutions insured by the FDIC.
By Keith Sellen, director, Office of Lawyer Regulation
Nov. 17, 2010 – On Nov. 5, 2010, the Wisconsin Supreme Court issued Order No. 10-05, In the Matter of the Petition to Amend Supreme Court Rule 20:1.15(e)(2)a., relating to Trust Account Insurance and Safety Requirements [2010 WI 127]. The order amends Supreme Court Rule 20:1.15(e)(2)a. as follows:
Each trust account shall be maintained at a financial institution that is insured by the federal deposit insurance corporation, the national credit union share insurance fund, the securities investor protection corporation, or any other investment institution financial guaranty insurance. Except as provided in subs. (b)(6) and (cm)(3)b. and c., trust property shall be held in an account in which each individual owner’s funds are eligible for insurance.
The amendment provides greater protection by requiring lawyers to hold trust property in an account in which each owner’s funds are eligible for insurance. Financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) provide eligibility for owners, provided the fiduciary nature of the account is identified in the records of the financial institution, and the financial institution or the lawyer maintain adequate records to determine the ownership of funds in the account.
Generally, financial institutions insured by the National Credit Union Share Insurance Fund (NCUSIF) provide eligibility for owners only when the owners are members of the credit union. Credit unions designated as “Low-Income Credit Unions” provide eligibility for owners without requiring that they be members.
The new requirement, effective Jan. 1, 2011, does not affect trust accounts in financial institutions insured by the FDIC. On the other hand, when placing funds in a trust account in a credit union, lawyers must be sure that each owner of funds is a member, or that the credit union is designated a “Low-Income Credit Union.”
Address questions concerning the new requirement to Mary Hoeft Smith, OLR’s Trust Account Program administrator, (608) 261-8296 or toll-free (877) 315-6941 (Option 2).
