ST. PAUL, Minn., and LIVONIA, Mich. (3/13/15)--Two state credit union leagues have recently worked with state legal organizations to ensure that credit unions in their states are eligible to offer Interest on Lawyer Trust Accounts (IOLTA).
The Credit Union Insurance Fund Parity Act, which became effective Dec. 19, created deposit insurance parity for credit unions by mandating that the National Credit Union Administration extend share insurance coverage to trust accounts. IOLTA is a method of raising money for charitable purposes, primarily the provision of civil legal services to indigent persons, through the use of interest earned on certain lawyer trust accounts.
The Minnesota Credit Union Network reached out to the Minnesota Lawyers Professional Responsibility Board--the organization that oversees the opening and maintaining of IOLTAs in Minnesota.
Financial institutions in Minnesota that offer IOLTAs must follow certain requirements pertaining to payment, remittance of interest, dividends and the reporting of any overdrafts.
This week, affiliated Minnesota credit unions should receive a packet in the mail from the Lawyers Professional Responsibility Board. The packets will provide information that will outline these requirements and include a standard agreement for IOLTAs, should a credit union decide to offer these accounts and be on the list of approved financial institutions.
Ken Ross, executive vice president/chief operating officer of the Michigan Credit Union League (MCUL), reached out to the Michigan State Bar Foundation to notify the organization of the change in federal law.
In response, the Michigan State Bar looked at the current authority within the Michigan Rules of Professional Conduct (MRPC), which showed that, while a change in federal statute had been made, Michigan did not recognize credit unions as approved providers of IOLTAs. The Michigan State Bar looked at the issue presented and worked quickly to amend the relevant rules of professional responsibility.