Banker FAQs
Answer: Yes, under specific conditions.
Explanation: A lawyer or LLP can accept payments to their COLTAF account via debit card, credit card, eCheck, ApplePay, AndroidPay, PayPal, Venmo, etc. However, because of ethical considerations applicable to lawyers and LLPs, they must use a specialized vendor for card payment processing. Card payment processors serving COLTAF customers must ensure that payments of earned fees are directed to the firm’s operating account, while unearned fees and other client and third-party funds are directed to the COLTAF account. It is also imperative that the card payment processor is capable of preventing chargebacks against the COLTAF account.
While COLTAF does not endorse any card payment processing vendors, the list below may be helpful to COLTAF account holders in their search for a card payment processor. COLTAF customers with a practice management software may wish to contact their practice management software provider to inquire about integration capabilities. Lawyers and LLPs are responsible for conducting their own evaluation of which payment processors offer adequate security and ethics compliance.
Answer: No.
Explanation: A financial institution may not issue a debit card for a COLTAF account. It is professional misconduct for a lawyer or LLP to use a debit card to withdraw funds from a COLTAF account.
Answer: Interest earned on COLTAF accounts must be remitted monthly and electronically by ACH or wire transfer.
Explanation: COLTAF requires participating financial institutions to remit interest earned on COLTAF accounts via ACH or wire transfer. Monthly remittance reports must be submitted to COLTAF via the Secure Online Portal no later than the 15th of the month following the earnings period. Interest payments must be made no later than the last day of the month following the earnings period. So, for example, interest earned in May must be paid no later than June 30th and the respective remittance report must be submitted to the Portal by June 15th.
COLTAF encourages banks to remit interest via ACH. While wire transfers are accepted, COLTAF will not accept charges or deductions for interest remittances made by wire transfers.
ACH or wire remittance instructions are provided to financial institutions when they are approved to offer COLTAF accounts. If you need this information again, please contact COLTAF staff.
Answer: Financial institutions must receive approval from COLTAF for the rate they propose to pay on COLTAF accounts.
Explanation: COLTAF participation is voluntary for banks and credit unions . However, financial institutions that opt to participate must comply with COLTAF’s interest rate comparability rule. While the full rule is more complex, the short version of the rule is that COLTAF must receive a rate equal to the highest rate that a financial institution offers on any comparable deposit product. There are three ways to comply with our interest rate comparability rule:
- Complete the Prime Partner Enrollment form and pay COLTAF’s Prime Partner rate of 75% of the Federal Funds Rate or 0.50%, whichever is greater. Prime Partner banks are listed on the COLTAF website. Prime Partner status also comes with marketing support and Community Reinvestment Act documentation. Rate approval is automatic, with no follow-up rate reviews.
- Complete the Benchmark Bank Enrollment form and pay COLTAF’s Benchmark rate of 60% of the Federal Funds Rate or 0.35%, whichever is greater. Benchmark Banks are listed on the COLTAF website, but do not receive marketing support or Community Reinvestment Act documentation. Rate approval is automatic, with no follow-up rate reviews.
- Propose your own rate. Financial institutions that propose their own rate must submit to COLTAF a full rate sheet, listing the rates they offer on all deposit products. COLTAF will review the rate sheet and determine the highest rate offered on any comparable product. The financial institution must offer COLTAF accounts a rate equal to the highest rate it pays on any comparable deposit product. Banks proposing their own rate are subject to periodic re-evaluation of their rate after initial approval.
Answer: To allow tellers to verify checks written on COLTAF accounts.
Explanation: There are thousands of COLTAF accounts. We often receive phone calls from tellers asking us to verify a check written on a COLTAF account. We cannot verify these checks because we don’t write them. Lawyers or LLPs at individual firms write the check from their COLTAF account. This is why we require you to ensure that any checks printed for a COLTAF account include the firm name and phone number. This saves time for both the teller and the person trying to cash the check.
Answer: Use the COLTAF Enrollment Form.
Explanation: Before opening a COLTAF account, first ensure that your bank is approved to offer COLTAF accounts. Only approved banks can open COLTAF accounts for Colorado lawyers and LLPs. If your bank is approved, complete the COLTAF Enrollment Form.
You must name the account in this format: “COLTAF Trust Account of [Firm Name, Lawyer Name, or LLP Name]”. Correct naming of a COLTAF account is critical. Failure to name the account in the format listed here could result in administrative errors that cost your bank money, discipline for the lawyer or LLP, or even insufficient FDIC coverage.
You must also ensure that the account is associated with COLTAF’s Tax ID, 74-2250921. This is important for a few reasons. First, COLTAF is a 501(c)(3), tax-exempt organization. Using our Tax ID ensures that no tax liability accrues to the law firm or professional setting up the account. Second, in the event of a bank failure, our Tax ID is one way for the FDIC to identify this account as a pass-through account with additional coverage. Third, many banks use our Tax ID as mechanism for identifying COLTAF accounts, ensuring that all interest owed to COLTAF is remitted in a timely manner.
After you have completed the enrollment form, a copy must be returned to COLTAF at 1120 Lincoln Street, Suite 701, Denver, Colorado 80203 or via our secure remittance portal.
Answer: Only if you are an approved COLTAF bank.
Explanation: Both banks and credit unions are eligible to become approved financial institutions. Colorado lawyers and LLPs are only permitted to deposit client and third-party funds at approved COLTAF banks. By going through the approval process, you will be able to offer both COLTAF, or pooled trust accounts, and individual trust accounts to lawyers and LLPs in Colorado. We strongly recommend that you schedule a time to speak to COLTAF staff before beginning this process.
Requirements:
- Your financial institution must do business in the state of Colorado.
- You must enter into a written agreement with the Office of Attorney Regulation Counsel. This agreement lays out your responsibilities as an approved financial institution, including the obligation to cooperate with COLTAF and to report overdrafts to the Office of Attorney Regulation Counsel using a standardized reporting format.
- Have your rate approved by COLTAF.
- Your rate can be approved in one of the following three ways:
- Elect to pay the Prime Partner rate of 75% of the Federal Funds Rate. Please note that there is a floor of 0.50% for the Prime Partner Rate.
- Elect to pay the Benchmark Bank rate of 60% of the Federal Funds Rate. Please note that there is a floor of 0.35% for the Benchmark Rate.
- Propose your own rate. However, any proposed rate must offer COLTAF a rate equal to the highest rate that you offer on any comparable product. You will need to submit a full rate sheet to COLTAF staff for a determination of whether your rate satisfies this requirement.
- Your rate can be approved in one of the following three ways:
Answer: No.
Explanation: We often receive phone calls from bank tellers asking us to verify a check. The check will say something like “COLTAF Account” or “COLTAF Trust Account.”
So, if the check says COLTAF on it, why can’t we verify the check? It’s because we do not write the checks you are seeing.
COLTAF accounts are lawyer or LLP trust accounts. There are thousands of COLTAF accounts in Colorado, each one is associated with a specific law firm, lawyer, or LLP. COLTAF administers the overall program and receives the interest generated on these accounts, but we do not write checks from these accounts. The individual law firm, lawyer, or LLP writes checks from their COLTAF account. Only the firm or professional who wrote the check can verify it.
To verify a check written from a COLTAF account, look for additional information on the check that lists the name of a law firm, lawyer, or LLP. COLTAF requires that all checks drawn on a COLTAF account list a firm’s or responsible professional’s name and phone number. If the check does not contain this information, ask the person presenting the check which law firm issued it.