FDIC Makes Settlement Funds Safe

Settlement Funds are Safe In Your Lawyer’s Trust Account at Any Bank

The FDIC (Federal Deposit Insurance Corporation) ruled on November 21, 2008 that effective immediately, all client funds deposited in lawyer trust accounts were eligible for unlimited deposit insurance coverage.

In tough economic times, with the possibility of bank failures, many lawyers were nervous that the traditional limit of $100,000.00 in FDIC coverage would not be enough to protect their client’s money if large settlements were held in a single bank trust account.

Even though the TLGP (Temporary Liquidity Guarantee Program) was established by the FDIC in October for non-interest bearing accounts through June of 2009, it was unclear whether this would protect interest bearing trust accounts. (In Florida, the IOTA (Interest On Trust Accounts) Program requires attorneys to have interest bearing accounts for trust funds which interest income is used for legal aid and the poor.) Because of this uncertainty, a number of organizations had urged the FDIC to clarify the situation.

Now you can rest assured that the Federal Government is backing all moneys held in your lawyer’s trust account. The FDIC rule may be accessed at www.fdic.gov/news/board/08BODtglp.PDF.