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    Wisconsin Lawyer
    March 01, 2006

    Fiduciary and IOLTA accounts subject to overdraft notification

    The Office of Lawyer Regulation (OLR) reminds lawyers that fiduciary accounts, as well as Interest on Lawyers' Trust Accounts (IOLTA), are subject to the overdraft reporting requirements of SCR 20:1.15(h) and SCR 20:1.15(j)(9). Demand accounts established by a lawyer for estates, guardianships, trusts, and the like must, under virtually all circumstances, have an overdraft agreement in place with the financial institution and the OLR. If the lawyer or the lawyer's office can disburse funds from a trust account or a fiduciary account by check, the account must be covered by an overdraft agreement, unless one of the following three exceptions exists.

    Wisconsin LawyerWisconsin Lawyer
    Vol. 79, No. 3, March 2006

    Fiduciary and IOLTA accounts subject to overdraft notification

    The Office of Lawyer Regulation (OLR) reminds lawyers that fiduciary accounts, as well as Interest on Lawyers' Trust Accounts (IOLTA), are subject to the overdraft reporting requirements of SCR 20:1.15(h) and SCR 20:1.15(j)(9). Demand accounts established by a lawyer for estates, guardianships, trusts, and the like must, under virtually all circumstances, have an overdraft agreement in place with the financial institution and the OLR. If the lawyer or the lawyer's office can disburse funds from a trust account or a fiduciary account by check, the account must be covered by an overdraft agreement, unless one of the following three exceptions exists:

    • the lawyer is serving as a bankruptcy trustee, subject to the oversight and accounting requirements of the bankruptcy court;
    • the property held by the lawyer when acting in a fiduciary capacity is property held for the benefit of the lawyer's "immediate family member" as defined in SCR 20:1.15(a)(6); or
    • the lawyer is serving in a fiduciary capacity for a civic, fraternal, or nonprofit organization that is not a client and that has other officers or directors participating in the organization's governance, SCR 20:1.15(k).

    In addition, there are two alternatives to overdraft agreements, with respect to fiduciary accounts, not trust accounts. Those alternatives are:

    • the lawyer has the fiduciary account independently audited by a certified public accountant on at least an annual basis; or
    • the lawyer holds the funds in a demand fiduciary account, which requires the approving signature of a cotrustee, coagent, coguardian, or copersonal representative before funds may be disbursed from the account, SCR 20:1.15(j)(9).

    For more information, contact Mary Hoeft Smith, OLR Trust Account Program administrator, at mary.hoeftsmith@wicourts.gov or call (608) 261-8296 or (877) 315-6941, ext. 2.


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