How do I set up a trust account?

If you will be handling client funds that need to be kept in a trust account, you want to make sure you set up the account properly. Not only are there numerous regulations as to how the account should be maintained, but there are also rules on what banks can be used and how the accounts should be created.

Many states have a list of approved financial institutions that can be utilized, such as in New York and Pennsylvania. In addition, there are also often geographic limitations as to where the account should be created. Many times the local State Bar association requires the account to be set up in the same jurisdiction as the law firm’s office^[1].

You should set up the account in either your name or the firm name, not in the name of your client, and use the address of the law firm. These accounts should be set up to be interest-bearing^[2].

Before setting up a trust account, check with your local bar association to find out what guidelines you are obligated to follow. If there is a list of approved institutions, choose one from the list and also check to see if there are any forms that need to be completed that are specific to your state or association.

References

1. A Practical Guide to Attorney Trust Accounts and RecordKeeping
2. Open an IOLTA Account