Hello everyone and welcome to this Ethics Alert will discuss the recent vote of the Florida Bar Board of Governors (BOG) to revise Bar Rule 5-1.1 to permit credit unions to accept and administer the IOTA trust accounts of Florida lawyers. The vote is discussed in an article in The August 15, 2016 issue of The Florida Bar News. The article is here: 8/15/16 Bar News proposed IOTA trust account rule credit unions.
The proposed rule amendment, which was unanimously approved at the BOG’s recent meeting, would add federally insured credit unions to the list of financial institutions authorized to hold trust accounts. Florida lawyers are currently only permitted to place IOTA funds in banks and savings and loans institutions. In 2014, the U.S. Congress passed a federal statute which expanded federal deposit insurance to include credit unions and the coverage is for up to $250,000.00, which is the same as bank and savings and loans deposits.
According to a quote in the article from the chair of the BOG Disciplinary Procedure Committee, which considered the rule revision, 41 states currently permit IOTA funds to be placed in credit union accounts and North Carolina’s proposed rule is awaiting approval. The chair also stated that credit unions pay “a little bit more interest” since they are nonprofit entities and banks are for-profit.
A representative of the Credit Union National Association indicated that the higher interest rates and lower costs associated with credit unions “will likely translate into higher revenue generated to The Florida Bar Foundation.” The Bar Foundation is paid the interest on IOTA trust accounts. It has been reported that the Bar Foundation’s IOTA income has been greatly reduced because of the record low interest rates which have been near zero for a number of years. The proposed Bar Rule revision has been sent to the Supreme Court of Florida for review and potential implementation.
Bottom line: If this Bar Rule revision is implemented by the Florida Supreme Court, Florida lawyers will be able to open IOTA Trust Accounts at credit unions, which provides an additional option; however, lawyers remain responsible for insuring the institutions full compliance with the Florida Bar Trust Account Rules and for their compliance as well.
Be careful out there!
Disclaimer: this Ethics Alert is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.
Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
29605 U.S. Highway 19 N., Suite 150,
Clearwater, Florida 33761
Office (727) 799-1688
Fax (727) 799-1670