How long must a lawyer hold a missing client's trust funds before treating them as abandoned and paying them to the state escheat fund?

Plain-English summary

The inquiry asked how long a lawyer must keep money received in trust from a client who later disappears and cannot be located on due inquiry before deeming the money abandoned and paying it into the escheat fund under Rule 10.2(H) and G.S. 116B-18.

The opinion explained that Rule 10.2(H) requires property held in trust for an owner whose identity is known but who cannot be located to be deemed abandoned and paid to the state treasurer under Chapter 116B of the General Statutes if, during the immediately preceding five-year period, the fund's principal has not increased, the owner has not accepted payment of principal or income, the owner has not corresponded in writing, and the owner has not otherwise indicated an interest in the account as shown by a record on file with the lawyer. The opinion stated that if any of those four events occurred during the preceding five years, no abandonment is deemed to have occurred and the funds must remain in trust; and that whenever one of the four events occurs, a new five-year period begins, after which the property must be deemed abandoned if none of the four events has occurred in the meantime. The opinion also pointed to G.S. 116B-13.5 on voluntary early delivery of funds.

Currency note

This opinion was issued in 1991, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct, and it relies on trust-account and escheat provisions (Rule 10.2(H), G.S. 116B) that have since been renumbered and revised. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules and the current escheat statute before relying on any specific period or requirement mentioned here.

Common questions

Q: How long must a lawyer hold a missing client's trust funds before escheating them?

A: The opinion concluded that the funds are deemed abandoned only after a five-year period in which none of four owner-activity events occurred, at which point they must be paid to the state treasurer.

Q: What resets the five-year clock?

A: The opinion stated that any one of four events resets it: the principal increasing, the owner accepting payment, the owner corresponding in writing, or the owner otherwise indicating an interest in the account on a record the lawyer holds.

Q: Can a lawyer turn the funds over before the five years run?

A: The opinion pointed to G.S. 116B-13.5 on voluntary early delivery of funds.

Background and rules framework

The opinion applied North Carolina Rule 10.2(H), the trust-account provision governing abandoned property held for a known but unlocatable owner (corresponding to the safekeeping-of-property duty in Model Rule 1.15), in tandem with the escheat statute, Chapter 116B of the General Statutes. The five-year inactivity test and its reset on any qualifying owner activity are drawn from the rule and statute, not from the lawyer's discretion.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 10.2(H) (abandoned trust property; payment to the state treasurer)
• MR 1.15 (safekeeping property)

Statutes:

• N.C. Gen. Stat. 116B-18 (escheat of abandoned property)
• N.C. Gen. Stat. 116B-13.5 (voluntary early delivery of funds)

See also

• NC Ethics Op. RPC 149: unclaimed client funds
• NC Ethics Op. RPC 226: disposition of unidentified funds

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-89/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Editors Note: This opinion was originally published as RPC 89 (Revised).

Inquiry:

Where a lawyer receives money in trust from a client who subsequently disappears and cannot thereafter be located by the lawyer upon due inquiry, how long must the lawyer retain the deposited funds in his or her trust account before deeming the money abandoned and paying the money into the escheat fund pursuant to the provisions of Rule 10.2(H) of the Rules of Professional Conduct and G.S. §116 (b)-18?

Opinion:

Rule 10.2(H) requires that property held in trust for an owner whose identity is known but who cannot be located must be deemed abandoned and paid to the state treasurer in compliance with the requirements of Chapter 116(b) of the General Statutes if, during the five-year period immediately preceding, the fund's principal has not increased, the owner has not accepted payment of principal or income, the owner has not corresponded in writing and the owner has not otherwise indicated an interest in the account as evidenced by a memorandum or other record on file with the lawyer. If any of the four events enumerated above have occurred during the five-year period immediately preceding, no abandonment will be deemed to have occurred and the client's funds must continue in the lawyer's trust. By the same token, whenever any of the four enumerated events occurs, a new five-year period begins to run during which the lawyer is obligated to maintain the property in trust and after which the property must be deemed abandoned, if none of the four enumerated events has occurred in the meantime. See also G.S. §116B-13.5, concerning voluntary early delivery of funds.