The handling of interest from settlement funds kept in trust accounts falls under Model Rule 1.151 regarding the safekeeping of property. Because the funds are considered to be the property of the client as long as they remain in the trust account, the client may be entitled to any interest accrued during its term in the account. In general, the interest earned on IOLTA accounts is forwarded to the state’s IOLTA program, which then uses it to fund charitable causes.
Once the settlement statement is completed, reviewed, approved and signed by your client and funds are transferred out of the trust account and into the operating account to cover fees and reimbursements, then you are no longer obligated to pay out interest on those dollar amounts.
For any funds remaining in the client account, interest accrued would generally be sent to the state’s IOLTA program. For example, if your client fails to deposit a check written on the trust account, the interest earned by the sitting funds would still be handled as is other trust account amounts.
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