Posts tagged: FDIC

Unlimited FDIC Insurance on IOLTA Accounts Due to Expire

The unlimited FDIC Insurance coverage on IOLTA accounts is set to expire on December 31, 2012.  Coverage will revert to $250,000 per client per institution.  In an article in ABA Journal Law News Now, it was reported that a provision of the 2010 Dodd-Frank law that provided for the unlimited coverage is scheduled to sunset on Dec. 31.  If Congress does not act, the amount of FDIC insurance available will be $250,000 per client, per financial institution, as long as the account is properly designated as a trust account and there is a proper accounting of each client’s funds.

Despite the gravity of the situation for law firms and their clients, and significant effort on the part of the American Bar Association, it seems unlikely that Congress will act, due to ” legislative maneuvering that was unrelated to the merits of the issue.”

Remember, that all funds held on behalf of a client at the same financial institution, even if in separate accounts, will fall under the same $250,000 maximum limit.  Firms which hold funds in excess of that amount for any one client may need to quickly open accounts at other financial institutions and move the excess to the new accounts.

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