Real estate closings usually involve the transferring of funds between parties, and IOLTA accounts play an important role in how attorneys receive and disperse funds to their clients.
What is an IOLTA Account?
An IOLTA account (Interest on Lawyer Trust Account) is a separate trust account that attorneys in Connecticut must set up to hold funds from clients and third parties.
While some assume the interest on this money goes to the recipient, by law, it goes to an organization called the Connecticut Bar Foundation. The foundation uses the money to support nonprofit organizations that provide civil legal services to low-income people in Connecticut, as well as financial scholarships based on financial need.
Attorneys are required to deposit funds into an IOLTA account when the client’s funds cannot earn income in excess of the costs incurred to secure such income.
The Connecticut General Assembly established the IOLTA program in 1984; today, every state in the country has an IOLTA program.
The Connecticut Bar Foundation’s website has more information about IOLTA accounts.