Here is a settlement example scenario:
Settlement Amount: $10,000
Advanced Case Costs: $2,000
Attorney Fee: $3,000
Client Settlement award: $5,000
Making a deposit into IOLTA
Upon receiving the $10,000 settlement check, you deposit it into your IOLTA bank account.
- In QuickBooks, you create a bank deposit to IOLTA and tag the Trust Settlement account. Your IOLTA bank account is now $10,000 and your trust settlement is now $10,000.
Making disbursements from IOLTA
You draft a settlement statement in Filevine and come up with the following items;
Advanced Case Costs: $2,000
Attorney Fee: $3,000
Client award: $5,000
Disbursements to the client or 3rd parties
- Cut a check to your client from the IOLTA bank account and tag Trust Settlement. Your IOLTA bank account is $5,000, and your Trust Settlement account is $5,000.
Disbursements to yourself
Option 1) Use Trust Check Request to record a trust disbursement to your firm
- Write yourself a check from the IOLTA bank account for the Advanced Case Costs and Attorney's fees. Your IOLTA bank account is now $0 and your Trust Settlement liability account is now $0.
- Deposit the check into your operating bank account (or initiate a bank transfer in online banking) and appropriately categorize the deposit to both Advanced Case Costs and to Attorney's fees. Advanced Case Costs are now $0, and $3,000 of income is recognized.
Option 2) Use a journal entry to record trust disbursement to your firm
- Post one journal entry to record the disbursement from trust, deposit to operating, fees earned, and expenses reimbursed. Trust Settlement is now $0, Advanced Case Costs are now $0, and $3,000 of income is recognized.
- Initiate a bank transfer to reimburse yourself from the IOLTA to your operating account (performed in online banking).
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