Jurisdiction Reference
New York IOLTA
Program: IOLA Fund of the State of New York
Official sources for New York IOLA and attorney trust account requirements. New York uses the term IOLA (Interest on Lawyer Account) for its pooled trust program.
General information, not legal advice — always confirm against the official New York sources below.
Ask about New York's IOLTA rules
Deposits, reconciliation, reporting, recordkeeping — answered from New York's official sources. Not legal advice.
Quick reference
Plain-language summaries of common New York trust-accounting requirements. Use these to orient yourself, then verify the exact rule text through the official sources.
| Topic | Summary | Category |
|---|---|---|
| When IOLA applies | Deposit qualified funds—funds too small in amount or expected to be held too briefly to earn net income for the client or beneficial owner—into an IOLA account. The lawyer makes this determination in good faith based on amount, expected duration, interest rates, and bank fees. | IOLA Fund FAQs; Judiciary Law § 497; 21 NYCRR 7000.2 |
| Separate trust account and account setup | Keep escrow and other entrusted funds in a special account separate from personal and business accounts. Use an eligible participating bank; title the account with the lawyer or firm name, “IOLA,” and Attorney Trust Account, Attorney Escrow Account, or Attorney Special Account. Overdraft protection is prohibited. | NY Rules of Professional Conduct Rule 1.15(b); IOLA Fund FAQs |
| Safekeeping, notice, and disbursement | Promptly notify a client or third person when receiving property in which they have an interest; maintain complete records, render appropriate accounts, and promptly deliver funds or property when due. Do not withdraw a disputed lawyer or firm portion until the dispute is finally resolved. | NY Rules of Professional Conduct Rule 1.15(b)(4), (c) |
| Withdrawals and authorized signatories | Make special-account withdrawals only to a named payee, never to cash. Use a check or, with prior written approval of the party entitled to the proceeds, a bank transfer. Only a lawyer admitted in New York may be an authorized signatory. | NY Rules of Professional Conduct Rule 1.15(e) |
| Account designation on banking records | Use the required special-account designation—Attorney Special Account, Attorney Trust Account, or Attorney Escrow Account—on the account and on all checks and deposit slips. For IOLA, the account title must also include the attorney or firm name and “IOLA.” | NY Rules of Professional Conduct Rule 1.15(b)(2); IOLA Fund FAQs |
| Good-faith qualified-funds determination | Make the qualified-funds decision personally and in good faith for each trust deposit. New York provides a statutory hold-harmless protection for a good-faith IOLA deposit; no fixed dollar benchmark applies, so document a reasoned assessment of amount, duration, rates, and fees. | Judiciary Law § 497(5); 21 NYCRR 7000.8(b); IOLA Fund FAQs |
| Participating-bank selection and pooled funds | Maintain IOLA at a participating bank and use the IOLA Fund’s current bank list when opening or moving the account. New York’s IOLA model permits pooling an attorney’s qualified funds in a single IOLA account; bank rate and fee practices directly affect the program’s yield. | IOLA Fund FAQs; IOLA Fund participating-bank list |
| Overdraft prohibition and insufficient-funds reporting | Do not attach overdraft protection to an IOLA or other attorney escrow account. New York requires participating banks to report a properly payable instrument presented against insufficient available funds to the Lawyers’ Fund for Client Protection, whether or not the item is honored. | NY Rules of Professional Conduct Rule 1.15(b)(1); 22 NYCRR 1300.1(c); IOLA Fund FAQs |
| Regular maintenance fees: protect client principal | Regular monthly maintenance and service charges are paid only from interest earned on the IOLA account—not from client principal. If interest for the period is insufficient, the bank may not take the difference from client funds or net it against interest earned on other IOLA accounts. | IOLA Fund FAQs; 21 NYCRR Part 7000 |
| Nonroutine charges are the lawyer’s responsibility | Treat wire fees, stop-payment fees, returned-item or NSF fees, check printing, cashier’s checks, and similar nonroutine charges as the lawyer’s or firm’s responsibility. Arrange payment from the operating account or deposit only a reasonable amount of firm funds in the trust account to cover charges. | NY Rules of Professional Conduct Rule 1.15(b)(3); IOLA Fund FAQs |
| Electronic-access controls | Do not use cash withdrawals or ATM-card access for IOLA funds. A bank transfer is permitted only with the prior written approval of the party entitled to the proceeds; otherwise use a check to a named payee and retain the approval and disbursement record. | NY Rules of Professional Conduct Rule 1.15(e); Matter of Butler; IOLA Fund FAQs |
| Seven-year records and closed-account disposition | Preserve Rule 1.15 financial records for seven years after the events recorded. When closing an IOLA account, first return known client funds; if funds remain for an unlocatable owner, follow Rule 1.15(f) and the Lawyers’ Fund for Client Protection process—not a transfer to the IOLA Fund. | NY Rules of Professional Conduct Rule 1.15(d), (f); IOLA Fund FAQs |
Official sources
The authoritative material for this jurisdiction. Confirm every requirement here before acting on it.
Notes
- New York uses "IOLA" rather than "IOLTA" for its interest on lawyer account program.
- Court rules set attorney trust-account obligations; the IOLA Fund handles program administration, participating banks, and forms.
New York — Frequently asked
Common questions for New York trust accounts. General information only — verify against the official sources above.
When must I use an IOLA account instead of a separate interest-bearing account?
Use IOLA for qualified funds: funds that are too small in amount or expected to be held too briefly to earn net income for the client or other beneficial owner if placed in a separate account. Funds expected to generate net income for the owner should not simply be pooled in IOLA.
Who decides whether client funds are “qualified funds” for IOLA?
The lawyer makes the determination in good faith. The relevant factors include the amount involved, how long the funds are expected to be held, the interest rate available, and the bank’s service charges or other costs of establishing and administering a separate account.
How should a New York IOLA account be opened and titled?
Open the account at an eligible participating bank. Its title must include the lawyer’s or law firm’s name, “IOLA,” and one of the required account designations: Attorney Trust Account, Attorney Escrow Account, or Attorney Special Account. Overdraft protection is not permitted.
May I leave my earned fees or other firm money in an IOLA account?
Only to the limited extent reasonably sufficient to maintain the account or pay bank charges. Once a lawyer’s or firm’s portion is due, it should be withdrawn; however, a disputed portion must remain in the special account until the dispute is finally resolved.
What must I do when I receive funds belonging in whole or in part to a client or third party?
Promptly notify the person with an interest in the property, keep complete records, render an appropriate accounting on request, and promptly deliver funds or property that the person is entitled to receive. These duties apply alongside the separate-account and recordkeeping rules.
How may funds be withdrawn from a New York special or IOLA account?
A withdrawal must be payable to a named payee—not to cash. It may be made by check or, with the prior written approval of the party entitled to the proceeds, by bank transfer. Only a lawyer admitted in New York may be an authorized signatory.
What records do I need to keep for an IOLA account, and for how long?
Maintain the complete financial records required by Rule 1.15, including accurate contemporaneous entries for receipts and disbursements. The rule requires the required records to be preserved for seven years after the events they record.
Can an IOLA account have overdraft protection, cash withdrawals, or a debit-card-style convenience feature?
No overdraft protection may be attached to the account. Rule 1.15 also requires withdrawals to a named payee and prohibits cash withdrawals; use checks or properly authorized bank transfers and maintain controls that preserve the account’s trust-account character.
What should I do if client funds remain after the matter closes and I cannot locate the owner?
Do not treat the balance as firm money or move it to IOLA merely because the matter is closed. Follow New York’s unclaimed-funds procedure and contact the Lawyers’ Fund for Client Protection for current direction before taking action.
Which bank fees may be charged against an IOLA account?
Routine account-maintenance charges are paid from the interest generated by the account, not from client principal. The lawyer or law firm remains responsible for nonroutine fees and charges; Rule 1.15 permits only a reasonable amount of lawyer or firm funds to cover account maintenance or charges.
May I maintain more than one IOLA account in New York?
New York permits more than one IOLA account, but the program’s core model is that an attorney’s qualified funds may be pooled in a single account. Before opening multiple accounts, consider whether the structure is necessary and whether it creates avoidable fees or reduces the interest available to the program.
I am admitted in New York but practice only federal law in another state. Where should I open IOLA?
The IOLA Fund does not make that determination for you. Assess the nature of the practice and its New York contacts; if you are admitted only in New York, you will likely be able to open IOLA only in New York. Treat this as a fact-specific professional-responsibility question.
Can I hold funds in another state’s IOLTA program instead of New York IOLA?
Possibly, but only if holding the funds in escrow in that other state is appropriate under all relevant circumstances. New York’s guidance treats the question as dependent on the matter and the connection of the funds to the other jurisdiction—not as an automatic choice based on the lawyer’s location.
Can I move my IOLA account to a different bank?
Yes. Open the IOLA account at the new participating bank using the ordinary opening process, transfer the account responsibly, and then close the old account after client funds are properly handled. The IOLA Fund says an attorney does not need to separately notify it of a closed account because the bank reports closure.
What is the proper way to close an IOLA account when I retire or stop using it?
Return funds to the appropriate known clients or beneficial owners before closing the account. The bank notifies the IOLA Fund of closure, so the lawyer ordinarily does not need to give separate notice; do not close the account while entrusted funds remain unresolved.
What should I do if I discover an unauthorized or fraudulent transaction in my IOLA account?
Contact the bank immediately, report the fraud, and cooperate with its investigation; a police report may also be appropriate. If the event leaves insufficient funds, consider promptly contacting the Lawyers’ Fund for Client Protection and obtain ethics or legal advice appropriate to the facts.
What happens to the IOLA account if the attorney dies or becomes unable to act?
New York’s rules address successor signatories for attorney special accounts. Use the Rule 1.15(g) process and the applicable disciplinary guidance rather than allowing a nonlawyer or unauthorized person to access client funds.
Can a client confirm with the IOLA Fund that my lawyer has an IOLA account?
Generally no. The IOLA Fund is statutorily restricted from disclosing account information to third parties, including whether an attorney has an account, except when disclosure is necessary to accomplish the Fund’s purposes or is compelled by legal process.
Where should a client complain about an attorney’s handling of escrow funds or seek reimbursement for theft?
Professional-discipline complaints belong with the Attorney Grievance Committee in the jurisdiction where the lawyer practices, not the IOLA Fund. A client who has lost money through an attorney’s mishandling of escrow funds may seek reimbursement guidance from the Lawyers’ Fund for Client Protection.
What happens to interest earned on an IOLA account?
IOLA is a pooled-interest program: interest supports civil legal services for low-income New Yorkers through IOLA Fund grants. The client’s principal remains protected; ordinary IOLA maintenance charges are paid only from interest, never from client principal.