Handling Interest on Lawyer Trust Accounts

The following procedure describes how to handle Interest on Lawyer Trust Accounts (IOLTA) in Abacus Accounting.

Click here for a video demonstration.

Add an Interest on Lawyer Trust Account (IOLTA) matter for your firm (one-time setup)

You only have to do this one time.

  1. In Abacus Accounting, click the Matters toolbar button and click Add.

  2. AbacusLaw opens. Click the Matters toolbar button and click Add.

  3. The Pick a Case Code window appears. Select any type of matter you like and click Done.

  4. Complete the information for the matter. Here are some recommendations (but not required):

    1. For Matter, enter your firm's name + IOLTA, for example, Simon & Barnes IOLTA.

    2. For File/case#, enter IOLTA.

  5. Click Save to save the matter.

  6. Click the Linked Names tab and add your firm as a Bill To link.

  7. Click Done.

  8. In the Accounting Data window that appears, ensure that the default trust account is correct.

  9. Click Done.

Trust account bank statement entries (monthly)

On your bank statement, there will be two interest transactions for the trust account: one deposit, which is interest earned, and one withdrawal, which is interest remitted. Note that banks normally report both of these transactions in the same month; however, some banks will report interest earned one month and then interest remitted the next month.

Record these entries in Abacus Accounting each month you receive your trust account bank statement.

  1. Click the Trust Deposits toolbar button.

  2. The Trust Deposits - Add window appears. Enter a positive trust deposit for the interest earned transaction, like this:

  3. Click Done to save the transaction.

  4. The Trust Deposits window appears with the new transaction listed. Ensure that Deposit Date matches the bank statement, highlight the transaction, and click Post.

  5. In the Trust Deposits window, click Add.

  6. The Trust Deposits - Add window appears again. Enter a negative trust deposit for the interest remitted transaction, like this:

  7. Click Done to save the transaction.

  8. The Trust Deposits window appears with the new transaction listed. Ensure that Deposit Date matches the bank statement, highlight the transaction, and click Post.