Happy New Year!
If you are acting as a fiduciary for your client or third party and if you are in possession of entrusted funds, you should be aware of recent changes to the Dodd-Frank Act which previously provided unlimited deposit insurance coverage protection under Section 343 for noninterest-bearing transaction accounts at all Federal Deposit Insurance Corporation (FDIC)-insured depository institutions from December 31, 2010 through December 31, 2012. Funds deposited into attorney IOLTA (Interest on Lawyer Trust Accounts) accounts after December 31, 2012, will no longer be insured under the Dodd-Frank Deposit Insurance Provision. The federal insurance will now only cover up to $250,000 per client ledger within an attorney’s IOLTA account. There are exceptions that may be explored as attorney IOLTA/escrow accounts may be eligible for pass-through coverage per client up to the $250,000 maximum amount.
The FDIC has posted useful information and answers to frequently asked questions on its website that you may find helpful:
Be mindful of this change as this may implicate your ethical obligations under Maryland Rule of Professional Conduct 1.15 (Safekeeping Property) and may result in severe consequences in the event that a fidicuary breaches his or her duty and fails to keep the entrusted funds intact.