OK, strictly speaking, you don’t need to have a trust account. If you never receive settlements on behalf of clients, never receive advance fee or cost payments from clients, and never hold other funds on behalf of clients – you might not (at least in MN) need a trust account. However, the Lawyers Professional Responsibility Board’s recommended practice is to maintain a trust account just in case. Think of it as cheap CYA insurance.
Opening an IOLTA (lawyer’s trust account) in Minnesota is a simple process – find an approved bank, download and complete a Notice to Financial Institution form (see the Lawyer Trust Account Board), and then take the form with you to the bank when you open the account. After spending 30 minutes with a banker and making a nominal deposit you’ll walk away with an IOLTA account.
While the Lawyers Board and the Minnesota Bar Association have a number of helpful materials on managing your trust account, they do omit some very practical hints like:
- Use different color checks for your operating and trust accounts (green for your operating account – its your money & red for your trust account – stop its your client’s money)
- Color code your deposit slips so that they match the check color of the account (green stripe for operating, red stripe for trust)
- Keep your trust account & operating account at different banks
- When choosing a bank for your trust account, ask what interest rate the bank pays on the funds – pick a bank that offers the best interest rate. It costs you nothing while helping others.