IOLTA programs began in the 1970s and now exist in all 50 states. In Kansas, more than 3,000 lawyers – including the lawyers in the law office next door – participate in IOLTA.
The interest collected from IOLTA helps fund statewide programs that provide legal services for the disadvantaged, public education about the law, and administration of justice.
If "Interest on Lawyers' Trust Accounts" is not impressive enough, a creative lawyer can always say they belong to the "Intelligent Outstanding Lawyers Taking Action" program!
Without IOLTA, nominal or short term client funds held in non-interest bearing, pooled checking accounts benefit neither the client nor the lawyer. Under IOLTA, these same nominal or short term funds are still pooled into one account. However, with changes in the banking laws and the explicit permission of federal regulators, banks may remit interest on these pooled accounts to a not-for-profit organization: the KBF's IOLTA program.
No matter how small individual IOLTA accounts may be, the aggregate of interest collected from all IOLTA accounts allows the KBF to annually fund many charitable programs.
The mechanics of setting up an IOLTA account or converting and existing client trust account to IOLTA are simple: complete an IOLTA Application Form provided by the KBF and deliver it to the bank for completion, then mail it to the KBF. That's it!
A lawyer or law firm need not change the way client trust deposits are managed. The bank will handle the paper work and the KBF will absorb bank service charges and fees related to participating in the IOLTA program from the interest earned.
The IOLTA account's tax identification number will be that of the KBF. The Foundation is a 501(c)(3) charitable organization and the IRS does not require a Form 1099 for this program.
Once an IOLTA account is established, there is no further effort required by the lawyer. The bank and the KBF will do the work!
The Kansas IOLTA program, approved by the Supreme Court in 1984, has generated more than $3 million in grant funds. IOLTA grants are primarily aimed at funding programs that provide civil legal services for the poor, law-related education, and administration of justice. In the past, nearly 80 percent of the funds have gone for civil legal to low income people, with the largest share going to provide direct legal services for victims of domestic violence.