- Administrative Determination - IOLTA and the "Best Customer" Standard 2009, concerns the IOLTA program requirements banks must meet in order to participate (click here).
- Administrative Determination- The Court views the IOLTA Fund as a banking customer and consumer in respect of the interest yield on pooled IOLTA accounts, February 6, 2003 (click here).
- Rule: 1:21-6, the NJ Recordkeeping rule (click here), describes required trust accounts, account titles, location of accounts and other important recordkeeping requirements. Note that Rule 1:21-6 is approximately halfway down the page.
- Rule: 1:28A, the IOLTA Rule (see below).
- Order Removing JP Morgan Chase Bank from List of Financial Institutions Approved to Hold Attorney Trust Accounts, 7/20/10 (click here).
NOTICES TO THE BAR
- Notice to the Bar Re: JP Morgan Chase Bank Trust Account Customers, 7/26/10 (click here).
- Notice to the Bar Re: Implementation of the Best Customer Standard in November 2005 and Attorney Responsibility for Bank Charges (click here).
RULE 1:28A. INCOME ON NON-INTEREST BEARING
LAWYERS TRUST ACCOUNTS (IOLTA) FUND
1:28A–1. Purpose; Administration; Appointments
(a) Administration. The Supreme Court shall appoint six
Trustees to administer and operate, in accordance with these Rules,
the IOLTA Fund of the Bar of New Jersey, whose purpose is to provide
a means of using the return to IOLTA on income earned by depository
institutions from funds held in IOLTA accounts to fund law-related,
public-interest programs. In addition to the Trustees appointed
by the Supreme Court, the following shall be ex officio members
and will have the right to vote on all matters except grant applications
made to the Board of Trustees, but they may participate in Board
discussions of the grant applications: the President of the New
Jersey State Bar Association; the First Vice President of the New
Jersey State Bar Foundation; and the President of Legal Services
of New Jersey, Inc.
(b) Qualification, Terms of Trustees. The original appointment
shall be of two Trustees for a one-year term, one for a two-year
term, one for a three-year term, one for a four-year term and one
for a five-year term. At the expiration of such terms all subsequent
appointments shall be for a term of five years, and no Trustee
who has served a full five-year term shall be eligible for immediate
reappointment. A vacancy occurring during a term shall be filled
for the unexpired portion thereof. At least four of the Trustees
appointed by the Supreme Court shall be members of the bar of this
(c) Organization; Meetings. The Trustees shall organize
annually and shall then elect from among their number a chairperson
and a treasurer to serve for a one-year term and such other officers
for such terms as they deem necessary or appropriate. Meetings
thereafter shall be held at the call of the chairperson. Except
as may be otherwise provided by this rule or by regulations promulgated
by the Trustees, five of the nine trustees, including the ex officio
members, shall constitute a quorum and may transact all business
not involving grants. Four of the six Trustees appointed by the
Supreme Court shall constitute a quorum for all decisions concerning
(d) Regulations. The Trustees shall adopt regulations,
consistent with these rules and subject to the approval of the
Supreme Court, governing the administration of the Fund, the procedures
for the presentation, consideration, and payment of grants, and
the exercise of their investment powers.
(e) Reimbursement. The Trustees shall serve without compensation.
Note: Adopted February 23, 1988, to be effective March 1, 1988;
paragraphs (a), (b), (c) and (d) amended September 15, 1992, to
be effective January 1, 1993; paragraph (a) amended July 10, 1998,
to be effective September 1, 1998; caption of Rule 1:28A and paragraphs
(a) and (b) of Rule 1:28A-1 amended February 6, 2003 to be effective
March 1, 2003.
1:28A–2. Attorney IOLTA Trust Accounts
(a) Attorney Participation. Commencing on the date established
by regulations to be adopted by the Board of Trustees pursuant
to Rule 1:28A–1(d), every attorney who practices in this
State shall maintain in a financial institution in New Jersey,
in the attorney's own name or in the name of a partnership of attorneys,
or in the name of the professional corporation or limited liability
entity of which the attorney is a member, or in the name of the
attorney or partnership of attorneys by whom employed, an IOLTA
non-interest-bearing trust account or accounts for all clients'
funds that are not placed at interest for the benefit of the client.
(1) The IOLTA non-interest-bearing trust account may be established
with any financial institution approved by the Supreme Court
to hold attorney trust funds under R. 1:21–6(a) and insured
by the Federal Deposit Insurance Corporation or an analogous
federal government agency. Funds in each IOLTA non-interest-bearing
trust account will be subject to withdrawal on request and without
(2) Funds shall be deposited in an IOLTA non-interest-bearing
trust account authorized by this Rule when an attorney determines
that a trust account deposit will not be placed at interest for
a client. Such a determination shall be made whenever an attorney
determines that either (A) the amount of the funds or the period
of time that the funds are held, if deposited in an interest-bearing
account, would not earn interest in excess of the cost incurred
to secure such interest, or (B) because of particular costs in
accounting, administration, or attribution of income, as may
occur when multiple parties or clients pool advance payments
against the costs of litigation in a single fund, a client's
funds should not be deposited in an interest-bearing account
because they will not realize income. No ethical impropriety
will attend an attorney's depositing such funds in an IOLTA non-interest-bearing
trust account in accordance with this Rule.
(3) An attorney or law firm shall maintain one or more IOLTA
non-interest-bearing trust accounts and shall submit to the approved
financial institutions in which such accounts are maintained
such forms as may be necessary to establish and maintain such
accounts, on forms prescribed by the Trustees, and provide a
copy of such form to the IOLTA Fund Trustees. If such a form
is not filed, the signed registration statement required by Rule
1:20–1 and Rule 1:21–6 shall constitute such authorization.
(b) Deposit of Funds in IOLTA Account. An attorney will
exercise good-faith judgment in determining initially whether the
funds of a client are of a nominal amount, are expected to be held
by the attorney for a short period of time, or otherwise fall within
the circumstances described in (a) above.
In exercising that judgment, the attorney will also consider such
other factors as:
(1) the cost of establishing and maintaining a separate non-IOLTA,
interest-bearing trust account, including service charges, bookkeeping
and accounting and tax-reporting procedures;
(2) the nature of the transaction(s) involved;
(3) the likelihood of delay in the matter for which the funds
(4) whether the funds received by an attorney in a fiduciary
capacity from a client or beneficial owner will generate less
than $150 of interest, provided that that $150 figure may be
used by an attorney as a minimum threshold indicating whether
monies received in a fiduciary capacity should be placed in an
IOLTA trust account, but shall not preclude the use of a higher
figure if the costs or circumstances warrant; and
(5) the other circumstances described in (a) above.
(c) Periodic Review of Deposits. At reasonable intervals,
an attorney should consider whether changed circumstances require
different action respecting the deposit of client funds.
(d) Registration; Enforcement. The accounts required by
this Rule shall be registered annually with the IOLTA Fund in the
manner prescribed by the IOLTA Fund Trustees. The Trustees shall
annually report the names of all attorneys failing to comply with
the provisions of this Rule to the Supreme Court for inclusion
on a list of those attorneys deemed ineligible to practice law
in New Jersey by Order of the Court. An attorney shall be removed
from the Ineligible List without further Order of the Court on
submission to the Trustees of the prescribed forms.
(e) Duties of Financial Institution. The financial institution
(1) from its income on such IOLTA accounts remit to the Fund
the amount remaining after providing such institutions a just
and reasonable return equivalent to their return on similar non-IOLTA
interest-bearing deposits. These remittances shall be monthly
unless otherwise authorized by the Fund. And
(2) report in the form provided by the Fund.
Note: Adopted February 23, 1988, to be effective March 1, 1988;
former rule deleted and R. 1:28A–3 renumbered as 1:28A–2
September 15, 1992, to be effective January 1, 1993; paragraph
(a)(1) of former R. 1:28A–3 amended November 7, 1988, to
be effective January 2, 1989; rule amended September 15, 1992,
to be effective January 1, 1993; new paragraph (d) adopted and
former paragraph (d) redesignated as paragraph (e) December 13,
1993, to be effective January 3, 1994; paragraph (a) amended July
10, 1998 to be effective September 1, 1998; paragraphs (a) and
(e) amended February 6, 2003 to be effective March 1, 2003.
1:28A-3. Duties of Trustees and Officers
(a) Audit and Report. The Trustees shall arrange for an
independent audit annually and at such other times as the Supreme
Court shall direct, such audits to be at the expense of the Fund.
The annual audit shall be included in a report to be submitted
annually by the Trustees to the Supreme Court, reviewing in detail
the administration of the Fund during the preceding year.
(b) Applications to the Supreme Court. The Trustees may
apply to the Supreme Court for interpretations of these Rules and
of the extent of their powers thereunder and for advice regarding
the proper administration of the Fund.
(c) Treasurer's Duties. The treasurer shall maintain the
assets of the Fund in separate accounts and shall disburse monies
therefrom only on the action of the Trustees pursuant to these
Rules. He or she shall file a bond annually with the Trustees with
such surety as may be approved by them and in such amount as they
Note: Adopted as R. 1:28A-4 February 23, 1988, to be effective
March 1, 1988; renumbered as R. 1:28A-3 and paragraphs (b) and
(c) amended September 15, 1992, to be effective January 1, 1993.
1:28A-4. General Powers of Trustees
(a) Reserve Fund. The Trustees of the Fund are authorized
to maintain a reasonable reserve fund. At least annually, after
a reasonable reserve fund has been created, the Trustees will solicit
applications for grants and award grants to those entities deemed
to be meritorious under the regulations of the Fund. Grant-making
decisions of the Board are final and are not subject to appeal
or judicial review.
(b) Grants. Grants will be made only for the following
(1) legal aid to the poor;
(2) improvement of the administration of justice;
(3) education of lay persons in legal and justice-related areas;
(4) such other programs for the benefit of the public as are
specifically approved by the New Jersey Supreme Court from time
(c) Awards. The Board of Trustees shall award:
(1) to Legal Services of New Jersey, Inc., not less than 75%
of the funds available annually for grants, to be used directly
by itself and, through subgrants, by its local member Legal Services
programs, in conducting legal assistance activities on behalf
of the poor throughout New Jersey;
(2) to the New Jersey State Bar Foundation, not less than 12.5%
of the funds available annually for grants to be used for the
purposes enumerated in R. 1:28A-4(b)(1)-(4) above; and
(3) to other entities deemed to be meritorious under the regulations
of the Fund, the balance of the funds available annually for
grants to be used for the purposes enumerated in R. 1:28A-4(b)(1)-(4)
The foregoing may be amended by the Supreme Court from time to
time in the public interest.
(d) General Powers. In addition to the powers conferred
by these Rules on the Trustees, they shall have the following general
(1) to receive, hold, manage, distribute, and invest the funds
received by the Fund and such other funds as it may receive by
voluntary contribution or otherwise;
(2) to employ and compensate consultants, agents, legal counsel,
and such other employees as they deem necessary and appropriate
consistent with personnel policies of the Judiciary; and
(3) to monitor and insure compliance with the provisions of
Note: Adopted as R. 1:28A-5 February 23, 1988, to be effective
March 1, 1988; renumbered as R. 1:28A-4 and amended September 15,
1992, to be effective January 1, 1993.
All activities conducted and records made or maintained by the
IOLTA Fund in connection with its operations under this rule shall
not be disclosed, except that the IOLTA Board is authorized to:
(a) Release such information as it may deem necessary to carry
out its responsibilities as prescribed by this rule, including
the identity of recipients and amounts and purposes of grant awards,
and data concerning participating financial institutions; and
(b) Release statistical and other information in its annual report
to the Supreme Court or as requested by the Supreme Court.
Note: Former Rule 1:28A-5 redesignated as Rule 1:28A-4 September
15, 1992 to be effective January 1, 1993. New Rule 1:28A-5 adopted
July 12, 2002 to be effective September 3, 2002.
- Notice to the Bar and Supreme Court Administrative
Re: Amendments to Rules Governing the IOLTA
Program (R. 1:28A)
Last September, the Supreme Court published for comment Rule amendment
proposals that had been presented by the Trustees of the IOLTA
Program. Comments on the amendments were received and reviewed
by the Court. At the direction of the Court, IOLTA Trustees met
in January with representatives of the banking industry to discuss
the proposed changes.
After consideration of the proposals and the comments they generated,
the Supreme Court has adopted modified
amendments to Rules 1:21-6(a) and 1:28A. The amendments
take effect March 1, 2003.
In addition to adopting the Rule
amendments, the Court has prepared an Administrative
Determination that addresses the changes to the IOLTA Rules and
Guidelines. The Administrative
Determination is being published simultaneously with this Notice
and the Rule
Stephen W. Townsend, Esquire
Clerk of the Supreme Court
Dated: February 6, 2003