It wouldn’t be a surprise if you had never heard of a “trust account” prior to partaking in a divorce. While there are many different types of trust accounts, in this context we will discuss accounts that attorneys, specifically family law attorneys, maintain on behalf of their clients.
To begin, a trust account is a separate account that a lawyer or law firm may open to hold money that a client or third party has an interest in. Attorneys are not allowed to comingle (mix) any of their own personal funds with funds held in a client’s trust account (with some limited exceptions). There are two types of attorney-client trust accounts. The first is an “IOLTA” account, which holds small amounts of money for short amounts of time, typically retainers, and the interest accrued goes to the state bar. The second type is a Segregated Interest-Bearing Attorney Client Trust Account (“segregated trust account”), which holds larger amounts of money for longer periods of time, and the interest accrued goes to the client. The second type, segregated trust accounts, will be discussed here. Continue reading