Jurisdiction Reference
Tennessee IOLTA
Program: Tennessee Bar Foundation IOLTA Program
Tennessee RPC 1.15 and Supreme Court Rule 43 require nominal or short-term client and third-party funds to be placed in pooled IOLTA at a Tennessee Bar Foundation-eligible institution. Current rules require comparable rates, compliance reporting, overdraft participation, monthly and quarterly reconciliation, and five-year records.
General information, not legal advice — always confirm against the official Tennessee sources below.
Ask about Tennessee's IOLTA rules
Deposits, reconciliation, reporting, recordkeeping — answered from Tennessee's official sources. Not legal advice.
Quick reference
Plain-language summaries of common Tennessee trust-accounting requirements. Use these to orient yourself, then verify the exact rule text through the official sources.
| Topic | Summary | Category |
|---|---|---|
| Segregate client and third-party funds | Property and funds held in connection with representation must remain separate from the lawyer's own property and funds. | Tenn. Sup. Ct. R. 8, RPC 1.15(a). |
| Use an insured trust account with a local office | Funds must be in a separate FDIC- or NCUA-insured account at an institution with a deposit-accepting office where the lawyer's office is situated, unless the owner consents otherwise. | RPC 1.15(b). |
| Use IOLTA for nominal or short-term funds | Funds unable to earn client income exceeding the costs to secure it must be deposited in a pooled IOLTA account. | RPC 1.15(b)(2). |
| Use client-benefit accounts for productive funds | Interest on non-IOLTA trust funds belongs to the clients or third persons whose funds generate it, net of permitted charges. | RPC 1.15(b)(1). |
| Exercise good-faith account-selection judgment | The lawyer decides IOLTA suitability in sound discretion using amount, duration, rate, costs, allocation capability, and other relevant circumstances. | RPC 1.15(b)(3), comments [5]-[6]. |
| Review account placement at reasonable intervals | The firm should reassess whether changes in amount or expected duration require moving funds to a client-benefit account. | RPC 1.15 comment [6]. |
| Use a Tennessee Bar Foundation eligible institution | IOLTA may be opened only at an institution determined eligible and listed by the Tennessee Bar Foundation. | Supreme Court Rule 43 §1. |
| Receive the highest qualifying comparable rate | An eligible institution must pay the highest generally available rate or dividend offered to similarly qualified non-IOLTA customers in the local market. | Supreme Court Rule 43 §2, as amended. |
| Participate in overdraft notification | Every lawyer trust account, including IOLTA, must be at an institution participating in the Rule 9 §35.1 overdraft-notification program. | RPC 1.15(b); Tenn. Sup. Ct. R. 9 §35.1. |
| Deposit advance fees and expenses until earned | Advance legal fees and expenses must be placed in trust and withdrawn only as fees are earned or expenses incurred. | RPC 1.15(c). |
| Maintain monthly account reconciliation | Reconcile the adjusted monthly bank balance to the total trust-account balance in the lawyer's records. | Tennessee Attorney's Trust Account Handbook. |
| Perform quarterly three-way reconciliation | Each quarter, reconcile the adjusted bank balance, trust register, and total individual client-ledger balances. | Formal Ethics Opinion 89-F-121; Trust Account Handbook. |
| Keep complete records for five years | Preserve trust-property records, ledgers, bank records, and reconciliation reports for five years after the applicable representation or record period. | RPC 1.15(b); Tenn. Sup. Ct. R. 9 §35; Handbook. |
| Report IOLTA compliance and account information | Tennessee lawyers must report compliance with IOLTA and client-fund handling requirements and follow Rule 43's technical operating requirements. | RPC 1.15 comment [3]; Supreme Court Rule 43. |
Official sources
The authoritative material for this jurisdiction. Confirm every requirement here before acting on it.
Tennessee Rule 8 — RPC 1.15
Current controlling safekeeping, IOLTA selection, advance-fee, and five-year record rule.
OpenTennessee Supreme Court Rule 43 — IOLTA
Current eligible-institution, comparable-rate, remittance, and compliance framework.
Open2025 Order Amending RPC 1.15 and Rule 43
Official current amendments replacing Rule 43 and updating interest and participation provisions.
OpenTennessee Attorney's Trust Account Handbook
Official Board handbook for ledgers, monthly and quarterly reconciliation, controls, and retention.
OpenTBPR — Interest on Lawyers Trust Accounts
Current IOLTA program information for Tennessee legal professionals.
OpenTBPR — Trust Accounting Resources
Approved institutions, overdraft agreement, handbook, forms, and ethics resources.
OpenNotes
- Reviewed against Tennessee Supreme Court and Board of Professional Responsibility materials available July 14, 2026, including the current Rule 43 amendments.
- Tennessee combines RPC 1.15 duties, Rule 43 IOLTA operations, and Rule 9 record and overdraft provisions; all three may apply.
- This summary is educational and does not replace current rules, Tennessee Bar Foundation eligibility determinations, or TBPR advice.
Tennessee — Frequently asked
Common questions for Tennessee trust accounts. General information only — verify against the official sources above.
What is Tennessee IOLTA?
It is the mandatory pooled trust-account program for nominal or short-term client and third-party funds that cannot earn net income for their owner.
Who administers Tennessee IOLTA?
The Tennessee Bar Foundation administers the program and determines eligible financial institutions.
Who needs a Tennessee trust account?
A lawyer holding client or third-party funds in connection with representation must maintain the separate insured account required by RPC 1.15.
Which funds belong in IOLTA?
Funds nominal in amount or expected to be held briefly when owner-specific income would not exceed the costs of securing it.
When should funds earn interest for the client?
When amount, duration, rate, and costs make net income practical, use a non-IOLTA trust account benefiting the owner.
Who decides IOLTA suitability?
The lawyer uses sound, good-faith professional judgment and should periodically reassess changed circumstances.
May any institution hold Tennessee IOLTA?
No. Select from the Tennessee Bar Foundation's current eligible-institution list.
What rate must an eligible institution pay?
The highest rate or dividend generally available to similarly qualified non-IOLTA customers in the local market, subject to Rule 43.
Must the account be federally insured?
Yes. RPC 1.15 requires FDIC or NCUA insurance.
What is Tennessee overdraft notification?
The institution reports trust-account insufficient-funds events under Supreme Court Rule 9 §35.1.
Who pays overdraft charges?
The lawyer. Overdraft charges cannot be deducted from trust-account interest.
Can lawyer funds cover service charges?
Yes, but only an amount reasonably necessary for that sole purpose.
Where do advance fees and expenses go?
Into trust until the fee is earned or the expense is incurred, then the earned amount is withdrawn promptly.
How often is monthly reconciliation performed?
Each month, reconcile the adjusted bank statement balance to the lawyer's trust-account records.
What is Tennessee's quarterly three-way reconciliation?
A comparison of adjusted bank balance, trust register, and the total of all individual client-ledger balances.
How long are Tennessee trust records kept?
Five years under RPC 1.15 and the Rule 9 recordkeeping framework.
Can a bookkeeper manage the account?
Yes under supervision, but the lawyer remains personally accountable and must understand and review the system.
What happens to disputed funds?
Keep the disputed portion in trust, promptly distribute undisputed funds, and pursue a prompt resolution method.
Must lawyers report IOLTA compliance?
Yes. Current Rule 43 and RPC commentary require compliance and client-fund handling reporting.
Can a lawyer seek exemption from Rule 43?
Rule 43 permits a narrow written exemption through the Tennessee Bar Foundation when no eligible institution is within reasonable proximity; it is not a general opt-out.