I opened my trust account at the same time I opened my business operating account. According to the State Bar of California:
“[l]awyers who handle small amounts of money for their clients, or money that is held for a short period of time, must . . . deposit these funds into an Interest on Lawyers’ Trust Account (IOLTA).” (www.calbar.ca.gov/Attorneys/MemberServices/IOLTA.aspx.)
For most new solos, this will probably apply to most funds held in a trust account. A list of banks eligible to provide IOLTA accounts is available at www.calbar.ca.gov/Attorneys/MemberServices/IOLTA/EligibleInstitutions.aspx.
When opening an IOLTA account, an attorney will need to provide the bank with
- A copy of the State Bar’s “Notice to Financial Institutions” form (downloadable fromwww.calbar.ca.gov/Attorneys/MemberServices/IOLTA/Guidelines.aspx)
- The State Bar’s federal taxpayer identification number.
Additionally, attorneys must update their state bar profiles when a new trust account is opened. Ensuring proper accounting of an IOLTA/trust account is beyond the scope of this Toolkit, but resources are available on the state bar website. I find myself using my trust account less and less frequently, as I rely more on credit cards for payment and security.