V. Trust Accounts
Effective July 1, 2023
Section 29. Trust Account Funds
(a) Required trust account records.
An attorney who is licensed in Indiana shall maintain current financial records as provided for in this Rule and required by Rule 1.15 of the Indiana Rules of Professional Conduct. An attorney shall keep records sufficient to determine, at any time, the amount held for each client or other beneficiary in relation to the total amount held in the trust account as a pooled whole. For each trust or other fiduciary account, attorneys shall create and retain the following records for a period of five (5) years after the conclusion of each matter:
(1) Deposit and disbursement journals containing a record of deposits to and withdrawals from each trust account, specifically identifying the date, source of funds, description, amount, and client or beneficiary of each item deposited; the date, payee, purpose, amount, and client or beneficiary of each item disbursed; and a running total of the balance of the trust account as a pooled whole (an example of a deposit and disbursement journal is appended to this Section as Exhibit A);
(2) Ledgers for all trust accounts showing, for each separate trust client or beneficiary, the amount of funds disbursed or deposited, the date of disbursement or deposit, the source of funds deposited, the payee of funds disbursed, and a running total of the amounts held in trust for each separate client or beneficiary (examples of client ledgers are appended to this Section as Exhibit B);
(3) A ledger detailing the nominal amount of attorney funds held in the account, showing the amount of attorney funds disbursed or deposited, the date of their disbursement or deposit, and a running balance of the amount of attorney funds held in the trust account (an example of a ledger of attorney owned funds is appended to this Section as Exhibit C);
(4) Relevant fee agreements;
(5) All checkbook registers, bank statements, records of deposit, and cancelled checks;
(6) Records of all electronic disbursements from trust accounts, including the name of the person authorizing the disbursement, the date of the disbursement, the name of the recipient, the purpose of the disbursement, and the client or beneficiary for whom the disbursement was made; and
(7) All periodic reconciliation reports for each trust account.
(b) Availability of records.
Records required by Indiana Admission and Discipline Rule 23, Section 29(a) may be maintained by electronic, photographic, or other media provided that they otherwise comply with these rules and printed copies can be produced. If trust account records are maintained electronically, the attorney shall ensure that backups occur regularly and frequently.
(c) Trust account safeguards.
(1) Attorneys shall deposit all funds held in trust in accounts clearly identified as “trust” or “escrow” accounts. Attorneys shall inform the financial institution of the purpose and identity of each trust account. Funds held in trust include funds held in any fiduciary capacity, whether as attorney, trustee, agent, guardian, executor or otherwise. Trust accounts shall be maintained only in financial institutions approved by the Indiana Supreme Court Disciplinary Commission.
(2) Attorneys shall not pay personal or business expenses directly from a trust account; instead, attorneys shall promptly withdraw fully earned fees from the trust account by first disbursing the fully earned fees to the attorney’s personal or business account.
(3) Only an attorney admitted to practice law in Indiana or a person under the direct supervision of the attorney shall be an authorized signatory or authorized to disburse funds from a trust account. If an attorney or law firm delegates authority to disburse funds from a trust account to a person not admitted to practice law in Indiana, this delegation shall be accompanied by safeguards, including at minimum:
(i) All bank statements or periodic account activity statements from the financial institution shall be delivered unopened to and reviewed by an attorney having supervisory authority over the non-attorney signatory, or the supervising attorney shall review the bank statements electronically directly from the financial institution; and
(ii) Responsibility for conducting periodic reconciliations between internal trust account records and periodic trust account activity statements from the financial institution shall be vested in a person who has no authority to disburse funds from the trust account.
(4) All receipts shall be deposited into a trust account intact, and records of deposits should be sufficiently detailed to identify each item deposited.
(5) Disbursements from a trust account shall not be made by a check payable to “cash” or to “bearer.” Disbursements from a trust account shall not be made by ATM withdrawal or cash withdrawal.
(6) Provided that the attorney complies with Admission and Discipline Rule 23, Sections 29(a) and 29(c)(5), an attorney may make disbursements from a trust account by means of electronic transfer.
(7) Attorneys shall reconcile their internal trust account records, specifically the records required by Admission and Discipline Rule 23, Section 29(a)(1-3) with the periodic bank account statements from the financial institution.
(d) Dissolution or sale of law practice.
Upon dissolution or sale of a law practice, the owner(s) or partner(s) shall make reasonable arrangements for the maintenance and preservation of the records required by Section 29(a).
Exhibit A - Attorney John Counsel’s Deposit and Disbursement Journal
|
Date |
Client or Beneficiary |
Source of Funds Deposited |
Payee |
Check Number |
Description |
Amount |
Trust Account Balance |
|
01/01/2015 |
John Counsel (attorney owned funds) |
John Counsel (attorney owned funds) |
|
|
Nominal amount of attorney funds deposited to open trust account |
$100 |
$100 |
|
01/02/2015 |
Susan Plaintiff |
ABC insurance company |
|
|
Personal injury settlement |
$30,000 |
$30,100 |
|
01/06/2015 |
Susan Plaintiff |
|
John Counsel |
101 |
Attorney fees for personal injury settlement |
($10,000) |
$20,100 |
|
01/06/2015 |
Susan Plaintiff |
|
Susan Plaintiff |
102 |
Client’s share of settlement |
($20,000) |
$100 |
|
01/20/2015 |
ABC Company |
ABC Company |
|
|
Prepayment of expenses and attorney fees |
$10,000 |
$10,100 |
|
01/28/2015 |
Jack and Jill Vendor |
Mark Purchaser |
|
|
Purchase price for real estate sale |
$200,000 |
$210,100 |
|
02/01/2015 |
ABC Company |
|
Court Reporter Inc. |
103 |
Deposition transcript |
($200) |
$209,900 |
|
02/02/2015 |
Jack and Jill Vendor |
|
Jack and Jill Vendor |
104 |
Proceeds of real estate sale |
($199,500) |
$10,400 |
|
02/02/2015 |
Jack and Jill Vendor |
|
John Counsel |
105 |
Attorney fees for real estate sale |
($500) |
$9,900 |
|
02/08/2015 |
ABC Company |
|
John Counsel |
106 |
Attorney fees – 5 hours at $200/hour |
($1,000) |
$8,900 |
Exhibit B - Client Ledgers
Susan Plaintiff
|
Date |
Source of Funds Deposited |
Payee |
Check Number |
Description |
Amount |
Total amount held for client or beneficiary |
|
01/02/2015 |
ABC Insurance Company |
|
|
Personal Injury Settlement |
$30,000 |
$30,000 |
|
01/06/2015 |
|
John Counsel |
101 |
Attorney fees for personal injury settlement |
($10,000) |
$20,000 |
|
01/06/2015 |
|
Susan Plaintiff |
102 |
Client’s share of settlement |
($20,000) |
$0 |
ABC Company
|
Date |
Source of Funds Deposited |
Payee |
Check Number |
Description |
Amount |
Total amount held for client or beneficiary |
|
01/20/2015 |
ABC Company |
|
|
Prepayment of expenses and attorney fees |
$10,000 |
$10,000 |
|
02/01/2015 |
|
Court Reporter Inc. |
103 |
Deposition transcript |
($200) |
$9,800 |
|
02/08/2015 |
|
John Counsel |
106 |
Attorney fees – 5 hours at $200/hour |
($1,000) |
$8,800 |
Jack and Jill Vendor
|
Date |
Source of Funds Deposited |
Payee |
Check Number |
Description |
Amount |
Total amount held for client or beneficiary |
|
01/28/2015 |
Mark Purchaser |
|
|
Purchase price for real estate sale |
$200,000 |
$200,000 |
|
02/02/2015 |
|
Jack and Jill Vendor |
104 |
Proceeds of real estate sale |
($199,500) |
$500 |
|
02/02/2015 |
|
John Counsel |
105 |
Attorney fees for real estate sale |
($500) |
$0 |
Exhibit C - Ledger of Attorney Owned Funds
John Counsel Ledger
|
Date |
Source of Funds Deposited |
Payee |
Check Number |
Description |
Amount |
Total amount held for client or beneficiary |
|
01/01/2015 |
John Counsel (attorney owned funds) |
|
|
Nominal amount of attorney funds deposited to open trust account |
$100 |
$100 |
Section 30. Overdraft Notification and Processing
(a) Definitions.
As used in this Section:
(1) “Financial institution” means a bank, savings and loan association, credit union, savings bank, and any other business or person that accepts for deposit funds held in trust by attorneys.
(2) “Trust account” means any account maintained by an attorney admitted to practice law in the State of Indiana for the purpose of keeping funds belonging to clients or third parties separate from the attorney's own funds as required by Indiana Professional Conduct Rule 1.15(a). It also means any account maintained by an attorney for funds held in trust in connection with any other fiduciary capacity, including as trustee, agent, guardian, executor, or otherwise.
(3) “IOLTA (Interest on Lawyer Trust Account)” means an attorney trust account maintained pursuant to Professional Conduct Rule 1.15(f).
(4) “Properly payable” refers to an instrument or other disbursement which, if presented in the normal course of business, is in a form requiring payment under the laws of the State of Indiana.
(b) Approval of financial institutions.
(1) Section 29(c)(1) requires that attorneys maintain trust accounts only in financial institutions that are approved by the Disciplinary Commission. A financial institution shall be approved by the Disciplinary Commission as a depository for trust accounts if it files with the Disciplinary Commission a written agreement, in the form attached to this Section as Exhibit A under which it agrees to report to the Disciplinary Commission whenever it has actual notice that any properly payable instrument is presented against a trust account containing insufficient funds, regardless of whether the instrument is honored.
(2) The written agreement of any financial institution is binding upon all branches of the financial institution.
(3) The Disciplinary Commission shall maintain a public listing of all approved financial institutions and shall publish it on its website. The names of approved financial institutions shall also be available by written or telephone inquiry to the Disciplinary Commission.
(4) The written agreement of any financial institution shall continue in full force and effect and be binding upon the financial institution until the financial institution gives thirty (30) days’ notice of cancellation in writing to the Disciplinary Commission, or until its approval is revoked by the Disciplinary Commission.
(c) Disapproval and revocation of approval of financial institutions.
(1) A financial institution shall not be approved in the first instance as a depository for trust accounts unless it submits to the Disciplinary Commission an agreement in the form attached to this Section as Exhibit A that is binding upon all of its branches and signed by an officer with authority to act on behalf of the institution. The refusal of the Disciplinary Commission to approve a financial institution due to its failure or refusal to submit an executed written agreement in the form attached as Exhibit A is not appealable or otherwise subject to challenge.
(2) A prior approval of a financial institution shall be revoked and the institution shall be removed by the Disciplinary Commission from the list of approved financial institutions if it engages in a pattern of neglect or acts in bad faith in not complying with its obligations under the written agreement.
(3) The Executive Director or designee shall communicate any decision to revoke the approval of a financial institution in writing by certified mail to the institution in care of the officer who signed the written agreement. The notice of revocation shall include a specific statement of facts setting forth the reasons in support of the revocation decision. The financial institution shall have a period of thirty (30) days from the date of receipt of the notice of revocation to submit a written request with the Executive Director or designee seeking reconsideration of the revocation decision. If an institution timely seeks reconsideration, the Disciplinary Commission shall appoint one of its members to act as hearing officer to take evidence. The Executive Director or designee shall act to defend the revocation decision. The hearing officer, after taking evidence, shall report findings and conclusions for review by the full Disciplinary Commission, whose decision in the matter shall be final. The approved status of a financial institution shall continue until the time the reconsideration process is final. The financial institution shall be liable for the costs of the reconsideration of the revocation decision and the costs of any hearing on the request.
(4) Once the approval of a financial institution has been revoked, the institution shall not again be approved as a depository for trust accounts until the institution petitions the Disciplinary Commission for approval and includes in the petition a plan for curing any deficiencies that caused its earlier revocation and for periodically reporting compliance with the plan in the future.
(d) Duty to notify institutions of trust accounts.
(1) Every attorney shall notify each financial institution in which he or she maintains any trust account, as defined above, that the account is subject to the provisions of overdraft reporting. For each trust account, an attorney or law firm shall maintain a copy of each notice throughout the period of time that the account is open and for a period of five (5) years following closure of the account.
(i) For IOLTA accounts as required by Professional Conduct Rule 1.15(f), notice by the attorney to the financial institution that the account is an IOLTA account shall constitute notice to the financial institution that the account is subject to overdraft reporting to the Disciplinary Commission.
(ii) For non-IOLTA trust accounts as permitted by Professional Conduct Rule 1.15(f)(1), every attorney shall notify each financial institution that the account is subject to overdraft reporting to the Disciplinary Commission by submitting a notice in the form attached to this Section as Exhibit B.
(2) In the case of a law firm that maintains one or more trust accounts in the name of the firm, only one notice from a member of the firm need be provided for each trust account. However, every member of the firm is responsible for ensuring that notice of each firm trust account is given to each financial institution wherein an account is maintained.
(e) Maintaining a trust account in a foreign jurisdiction.
Any attorney who is admitted to practice law in another jurisdiction having attorney trust account overdraft notification rules that are substantially similar to the Indiana rules governing attorney trust account overdraft notification may apply to the Disciplinary Commission for exemption from compliance with these rules to the extent that the attorney maintains trust funds belonging to Indiana clients in a trust account in a foreign jurisdiction that is subject to overdraft reporting under the rules of that jurisdiction. Any application for exemption shall be in writing and shall include:
(1) A copy of the rules from the other jurisdiction governing attorney trust account overdraft notification;
(2) A copy of the agreement between the financial institution and the agency in the foreign jurisdiction that administers the overdraft notification program verifying that the financial institution participates in the foreign jurisdiction's attorney trust account notification program;
(3) A list of the names of all financial institutions, account names, and account numbers of all trust accounts maintained by the attorney in the foreign jurisdiction; and
(4) A certification under oath by the attorney that each foreign trust account has been properly identified to the foreign financial institution as an attorney trust account subject to overdraft reporting.
Any attorney seeking exemption under the terms of this provision is under a continuing obligation to immediately report any changes in the information provided to the Disciplinary Commission.
(f) Overdraft reports.
(1) Overdraft notifications made by financial institutions to the Disciplinary Commission shall be in the following format:
(i) In the case of a dishonored instrument or dishonored disbursement, the report shall be identical to the overdraft notice customarily forwarded to the customers of the financial institution, and it should include a copy of the dishonored instrument, if a copy is normally provided to customers of the financial institution.
(ii) In the case of disbursements or instruments that are presented against insufficient funds but which are honored, the report shall identify the financial institution, the attorney or law firm, the account number, the date of presentation for payment, and the date paid, as well as the amount of overdraft created.
(2) Reports under subsection (f)(1) shall be made simultaneously with, and within the time provided by law for notice of dishonor, if any. If an instrument presented against insufficient funds is honored, then the report shall be made within five (5) banking days of the date of presentation for payment against insufficient funds.
(3) Every attorney practicing or admitted to practice in this jurisdiction shall, as a condition thereof, be conclusively deemed to have consented to the reporting and production requirements mandated by this Rule.
(4) Nothing in this Rule shall preclude a financial institution from charging a particular attorney or law firm for the reasonable cost of producing the reports and records required by this Rule.
(g) Investigation of overdrafts.
(1) Whenever the Disciplinary Commission receives an overdraft notice from a financial institution, the Executive Director or designee shall send a letter to the respondent attorney seeking a comprehensive explanation of the overdraft, to which the respondent shall respond within thirty (30) days of receipt. This letter is a demand for information, noncompliance of which is a violation of Professional Conduct Rule 8.1(b).
(2) If the respondent fails to timely and adequately respond to the notice of overdraft and demand for explanation, the Executive Director or designee may file a non-cooperation case against the respondent pursuant to Section 10.1.
(3) Upon considering the respondent’s response to the notice of overdraft, the Executive Director or designee may dismiss the overdraft matter as not presenting a substantial issue of misconduct, or the Executive Director or designee may continue to investigate the matter and then present the matter for consideration to the Disciplinary Commission pursuant to Section 11. Thereafter, the procedures for disciplinary actions shall apply.
(4) In investigating an overdraft, the Disciplinary Commission and the Executive Director or designee shall have all investigatory powers otherwise available when investigating grievances, including but not limited to the power to issues subpoenas, take testimony, require accountings, send demand letters, and perform trust account audits. Likewise, a respondent attorney who is the subject of an overdraft investigation shall fully and promptly cooperate with the Disciplinary Commission’s investigation.
(5) Nothing in this Section shall limit the Disciplinary Commission’s ability to investigate overdrafts or trust account mismanagement pursuant to its authority under Section 10.
Exhibit A to Section 30
TRUST ACCOUNT OVERDRAFT REPORTING AGREEMENT
TO: INDIANA SUPREME COURT DISCIPLINARY COMMISSION
The undersigned, being a duly authorized officer of ____________________________________________________________, a financial institution doing business in the State of Indiana, and the agent of the named financial institution specifically authorized to enter into this agreement, hereby applies to be approved to receive attorney trust accounts in the State of Indiana. In consideration of the Indiana Supreme Court Disciplinary Commission's approval of the named financial institution, the institution agrees to comply with the reporting requirements for such institution as set forth in Indiana Admission and Discipline Rule 23, § 30, as now in effect and as hereafter amended from time to time.
Specifically, the named financial institution agrees:
(1) To report to the Indiana Supreme Court Disciplinary Commission in the event it has actual notice that any properly payable attorney trust account instrument is presented against insufficient funds, irrespective of whether the instrument is honored. (This obligation applies to both IOLTA trust accounts under Indiana Professional Conduct Rule 1.15(f)(1) and non-IOLTA attorney trust accounts under Indiana Professional Conduct Rule 1.15(f)(1).)
(2) That all such reports shall be in substantially the following format:
(a) in the case of a dishonored instrument, the report shall be identical to the overdraft notice customarily forwarded to the depositor and should include a copy of the dishonored instrument, if such a copy is normally provided to the depositor;
(b) in the case of an instrument that is presented against insufficient funds but which instrument is honored, the report shall identify the financial institution, the depositor attorney or law firm, the account number, the date of presentation for payment, the date paid, and the amount of the overdraft created thereby.
(3) That all such reports shall be made within the following time periods:
(a) in the case of a dishonored instrument, simultaneously with, and within the time provided by law for, notice of dishonor;
(b) in the case of an instrument that is presented against insufficient funds but which instrument is honored, within five (5) banking days of the date of presentation for payment against insufficient funds.
(4) To provide the Disciplinary Commission with the name and contact information of the financial institution’s primary point of contact for matters pertaining to its responsibilities under this agreement, and to promptly update that contact information in the event it changes.
This agreement shall apply to all branches of the named financial institution and shall not be canceled except upon thirty (30) days notice in writing to the Executive Director, Indiana Supreme Court Disciplinary Commission.
Name, Address, and Telephone Number of Contact Person for Financial Institution:
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
DATE:__________________
CORPORATE SEAL
___________________________________________
Signature of Authorized Official
___________________________________________
Printed or Typed Name of Authorized Official
___________________________________________
Title or Position of Authorized Official
ACKNOWLEDGMENT
STATE OF _________________________ )
) ss:
COUNTY OF _______________________ )
On the ______ day of ____________________, 20___, before me, a Notary Public in and for the State of ______________, personally appeared the above-named individual, known to me to be the person executing the foregoing instrument, and acknowledged and executed said instrument as his/her free and voluntary act and deed.
______________________________________
Notary Public (signature)
______________________________________
Notary Public (printed or typed)
My Commission Expires:______________________ County of Residence:______________________
ACCEPTANCE
The named financial institution is hereby approved by the Indiana Supreme Court Disciplinary Commission as a depository for trust accounts in the State of Indiana until such time as this agreement is canceled upon thirty (30) days' written notice to the Commission by the institution or is revoked by action of the Disciplinary Commission.
DATE: __________________
____________________________________
Executive Director
Indiana Supreme Court Disciplinary Commission
Exhibit B to Section 30
Attorney Trust Account Notification
____________________________________
Name of Attorney
______________________________
Attorney Number
______________________________________________________________________________
Name of Law Firm
______________________________________________________________________________
Business Address
______________________________________________________________________________
City State Zip Code
______________________________________________________________________________
Name of Financial Institution
______________________________________________________________________________
Business Address
______________________________________________________________________________
City State Zip Code
______________________________________________________________________________
Name of Account
______________________________
Account Number
________New _______Existing
Type of Account:
_____Trust _____Guardian
_____Escrow _____Estate
_____Other ____________________________________________
(Please Describe)
The undersigned hereby certifies that he/she is an attorney licensed to practice law in the State of Indiana and that the information indicated above provided to his/her financial institution is accurate. This information is provided to permit the financial institution to report all overdraft or insufficient funds occurrences to the Indiana Supreme Court Disciplinary Commission pursuant to Indiana Admission and Discipline Rule 23, Section 30.
Date:______________________
_______________________________________
Signature