Must a Vermont lawyer serving as trustee place a family trust's assets in an approved IOLTA account?
Apply this to your situation
This page answers the general question as of 2011. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
A lawyer was named sole trustee of a client's family trust. After the client died, the trust was funded for the surviving spouse and later other family members. The lawyer planned to invest assets in mutual funds and pay income to the spouse under the trust's terms and Vermont's Uniform Prudent Investor Act.
The committee distinguished a lawyer's trust account for money held through legal representation from a fiduciary account arising through service as trustee. It read Rules 1.15A and 1.15B as applying the pooled-interest and approved-institution requirements to the former, not this separate fiduciary role. The lawyer still had to comply with the trust, prudent-investor law, and other rules on maintaining fiduciary accounts.
The opinion explained that Vermont's June 2009 rule amendments removed former Rule 1.15C language that had created a possible conflict between professional-conduct rules and fiduciary duties.
In practice
For the family trust described, the committee allowed investments outside Professional Responsibility Board approved institutions and required distribution of income according to the trust. It did not treat the trust's investment income as pooled-interest proceeds payable to the Vermont Bar Foundation.
Common questions
Q: Did the lawyer trustee have to put the trust's assets in IOLTA?
A: No. The committee said the IOLTA rule addressed funds held as a result of client representation, while the described assets were held in a separate fiduciary capacity.
Q: Could the trustee use mutual funds outside approved banks?
A: The committee said the lawyer was not limited to approved financial institutions for this fiduciary trust and had to comply with the trust and Vermont prudent-investor law.
Background and rules framework
The opinion interpreted Vermont Rules 1.15, 1.15A, and 1.15B alongside 14A V.S.A. Chapter 9, Vermont's Uniform Prudent Investor Act. It relied on the rules' separate definitions of representation trust accounts and fiduciary accounts.
Citations and references
Rules of Professional Conduct:
- Vermont Rules of Professional Conduct 1.15, 1.15A, and 1.15B
- Former Rule 1.15C, discussed as removed in 2009
Statutes:
- 14A V.S.A. Chapter 9, Vermont Uniform Prudent Investor Act
See also
Source
- Landing page: Vermont Bar Association client-property opinions
- Original PDF: Opinion 11-04
What do the rules say today, for your facts?
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