Full question:
My daughter is receiving a $225K settlement, $150K first payment + $75K to come later, from the accidental death of her 6-month old daughter under the care of the babysitter. The payment is coming from the insurance company of the babysitter. I was appointed by the court as the administrator and so I opened a estate account under the daughter's name. But then I was told by our lawyer that the money is going to the lawyer's trust account and they will pay the creditors (about $60K + his fees) before remitting us the rest of the money. Is it still advisable to have the rest of the money deposited into the estate account? Do I need to apply for a probate to disburse the money to our daughter, who is the sole beneficiary? She doesn't want the money to go directly to her because she doesn't handle finances well. The death occured in Nevada as that is where they used to live, but our daughter now lives in Colorado. And although we are currently living outside of the US, our state of residence is Colorado. I just received an email from the lawyer's legal assistant that she is sending us the check so my daughter and I can sign it, then mailed back to them before they can cut us a check. Is this standard procedure- depositing the money in the lawyer's trust account and them paying the bills? At first I was told they will prepare an affidavit for me to sign so they can pay for the medical bills. Is this also standard procedure? Can I pay the creditors myself? I only deal with them through email after the first two initial contacts. Please advise.
- Category: Civil Actions
- Subcategory: Settlements
- Date:
- State: New York
Answer:
IOLTA stands for Interest on Lawyers’ Accounts—An IOLTA account is an interest-bearing account set up specifically to hold trust funds. The interest that accrues on an IOLTA account is given by the financial institution to a state bar foundation or other nonprofit legal organization for the good of the public. IOLTA accounts can usually be used only for client funds that are a nominal amount or that are expected to be held for only a short time.
The account is also used for distributing settlement funds, for instance. If a firm settled a case for $10,000, the opposing party would issue a $10,000 check payable to the law office and the client. The law office would deposit the $10,000 in the trust account. If the law office was entitled to $2,000 of the money, a trust check would be written to the client for $8,000, and a $2,000 check would be written to the law office itself (to deposit in its operating account).
Initially, Nevada’s program was opt-in. It allowed attorneys to deposit the client funds being held in trust into an account which paid the interest earned on that account to an agency charged with providing legal services to the poor. In 1992, the Nevada IOLTA program subsequently became an opt-out program, meaning an attorney had to take action to prevent interest on a trust fund from being distributed to the IOLTA designated agency. Finally, in May of 2008, the IOLTA program became mandatory, except for those funds that SCR 217 continues to allow to pay interest to the client (funds that are not “nominal or to be held for a short period of time”).
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
