After the application deadline, the Fund begins the process of evaluating all requests for grants. Final decisions for 2017 grants will be made in late November. All applicants, successful and unsuccessful, will be notified of the Board’s decision by December 1, 2016.
It is too soon to determine the size of the 2017 grant pool. Our funding availability depends upon the rate of interest we earn on attorney trust account balances. Interest rates are very, very low and are not projected to improve until late in 2016. In view of limited resources for the grant program, there can be no assurance that the Fund will grant the requested amount to any applicant or that repeat applicants will receive continued funding.
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News for Attorneys and Law Firms:
NOTICE TO THE BAR
Re: IOLTA Ineligible List
The Supreme Court has entered an Order declaring attorneys who have not complied with the mandatory IOLTA program to be administratively ineligible to practice law. The Court’s Order, which takes effect October 21, 2016, and the list of ineligible attorneys are being published with this Notice.
Attorneys on the IOLTA ineligibility list will remain there until in full compliance with the requirements of Rule 1:28A-2(d) and the IOLTA Trustees so report to the Court.
Questions should be addressed to:
Ms. Ellen Ferrise, Executive Director
IOLTA Fund of the Bar of New Jersey
One Constitution Square
New Brunswick NJ 08901-1500
Mark Neary, Esquire
Clerk of the Supreme Court
Dated: October 19, 2016
About NCUA Insurance on Attorney Trust Accounts
On December 18, 2014, President Obama signed into law the Credit Union Share Insurance Fund Parity Act creating deposit insurance parity for credit unions by directing the National Credit Union Administration to extend share insurance coverage to trust accounts such as IOLTA and other similar accounts. This means that each client’s funds held in a pooled attorney trust account can now be insured up to the maximum limit, generally $250,000 per depositor per institution. New rules and regulations for this new aspect of NCUA coverage have not yet been published.
The Dodd-Frank Act, signed into law on July 21, 2010, permanently raised the standard maximum deposit insurance amount to $250,000, applicable to both banks and credit unions.
Law firms are required to maintain an attorney trust account at an approved depository. Approval is given on behalf of the Supreme Court of New Jersey by the Office of Attorney Ethics when a financial institution agrees to report overdrafts and cooperate with the IOLTA program. The approval of a credit union to offer trust accounts in New Jersey does not imply an endorsement of that institution’s safety and soundness. It is the law firm’s responsibility to select a credit union based on financial condition, convenience and other factors.
Special Note: The law was effective immediately. Law firms and attorneys are encouraged to check the list of approved trust account depositories before proceeding to open a new account because most NJ credit unions have not yet been authorized.
This publication may add to your understanding of share account insurance available at federally-chartered credit unions: http://www.mycreditunion.gov/protect/Pages/SI.aspx.
If it seems too good to be true, it usually is…
New Jersey attorneys should be alert to scams involving attorney trust accounts.
Typical scams aimed at law offices include:
- messages alleging that the recipient’s IOLTA account has insufficient funds to pay an outstanding check;
- an emailed request, often from overseas, for help in collecting a divorce settlement
from an ex-spouse;
- unsolicited email requests, often from overseas, for legal help collecting money or judgments, sometimes apparently coming from actual professionals/companies;
- a real estate transaction for an overseas “client” not referred to you by a reliable source; or
- impersonation of law firms by scam artists who issue bogus checks.
There are no special protections afforded to an IOLTA account. If you deposit a fraudulent check and disburse the funds before sufficient time has passed to clear the check and allow for any returns, you are responsible for the ensuing overdraft. Many of the scams mentioned above involve amounts from $200,000 to $500,000.
Cases involving bank fraud are investigated by the Secret Service. If you are targeted, contact an office in your area. Internet fraud should be reported to the Internet Crime Complaint Center.
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News for Banks and Credit Unions:
NCUA INSURANCE COVERAGE OF TRUST ACCOUNT DEPOSITS
On December 18, 2014, President Obama signed into law the Credit Union Share Insurance Fund Parity Act creating deposit insurance parity for credit unions by directing the National Credit Union Administration to extend share insurance coverage to trust accounts such as IOLTA and other similar accounts. While new rules have not been published yet, the Act was effective immediately. Credit unions must first be approved by the Office of Attorney Ethics before offering attorney trust accounts to law firms.
FDIC COVERAGE OF TRUST ACCOUNT DEPOSITS
FDIC coverage of attorney trust accounts is different than for ordinary bank accounts. To link to the FDIC’s brochure about insured deposits, click here:
ACCOUNT OPENING PROCEDURES FOR A NEW TRUST ACCOUNT
All new attorney trust accounts should be opened as non-interest bearing checking accounts. Please instruct the attorney or law firm to call IOLTA to request registration forms. Together with the attorney we will determine if the account should be converted to interest-bearing for IOLTA. Until then, use the attorney’s Tax I.D. number (NOT the IOLTA number).
Attorneys do not need our permission or any paperwork to open an attorney trust account. You should allow use of the account in accordance with your usual policies. We will correspond with your Deposit Operations area if the lawyer indicates to us that the account should be an IOLTA.
The word “IOLTA” should not appear on checks or deposit slips. Do include the phrase: “Attorney Trust Account,” preferably on the second line. If the account is later converted to an “IOLTA,” the account title will be modified to include the word “IOLTA” but the checks and deposit slips can stay unchanged.
If your bank is providing digital images, you should know that attorneys are required to comply with Rule 1:21-6(b) which mandates no more than two checks per page (front and back).
BANKS AND CREDIT UNIONS SEEKING TO BECOME AUTHORIZED DEPOSITORIES
The Supreme Court of New Jersey requires that attorneys maintain their trust accounts with institutions that maintain deposit insurance from a federal government agency such as FDIC or NCUA, are willing to cooperate with the IOLTA program and meet the Best Customer Standard and report overdrafts to the Office of Attorney Ethics.
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