If you were the victim of a personal injury case, what happens to your settlement proceeds between the time you sign the release and the time you get your check? This not too often asked question has some good news in the answer: most personal injury settlements aid Massachusetts Legal Charities through IOLTA!
What is IOLTA?
Interest On Lawyers’ Trust Accounts is IOLTA. It is the Supreme Judicial Court requirement that monies that are not the attorney’s, but not yet the clients, be put into an IOLTA trust account for the short term.
There are over 14,000 IOLTA accounts in Massachusetts, in over 200 financial institutions.
How does IOLTA Work in Personal Injury Cases?
Once you have signed the release, your attorney will send it to the insurance company. After the insurance company undertakes the standard requirements of checking for Commonwealth of Massachusetts Department of Revenue liens, and medical liens that they have, they send your attorney a check. That check is typically payable as “Client John Smith and Attorney Nola Jones.” Your personal injury attorney will deposit that check into his or her IOLTA trust account. That account has many attributes similar to other accounts.
One attribute is different, however. The interest goes to the IOLTA funds which are unique. If your personal injury settlement comes in and there are no issues, your personal injury will likely send you your check in a few days. The interest that you “lost” is nominal to you. However, it adds up with personal injury settlements all over the Commonwealth, along with IOLTA monies from other kinds of cases.
Who Receives the IOLTA Monies?
The Supreme Judicial Court distributes the funds via the Massachusetts IOLTA Committee to three entities to distribute the monies. They must provide civil legal services or services to improve the administration of justice for low-income residents. For example, the Boston Bar Association runs the Boston Bar Foundation and they recently announced that the IOLTA monies they received will be distributed to a host of legal non profits, including programs advocating for victims of domestic violence, children at risk, immigrants, and veterans.
Ask Your Personal Injury Attorney About Their IOLTA Account
Your personal injury attorney will likely inform you that the monies from any final settlement, or partial settlement, will be deposited into his or her IOLTA account and that they will become available to you shortly thereafter. He or she will also inform you of the name of the bank or financial institution if necessary. Your attorney cannot inform you of where the interest will go, nor can they inform you of the amount of interest – interest on such a trust account is not itemized by case and it is not deductible for any charitable purpose for you, or your attorney.
Attorney Neil Burns has maintained his IOLTA account since 1987.