Lawyer & LLP FAQs
Answer: Verify that you have met the threshold requirements for a refund. Then, write to COLTAF at 1600 Broadway, Ste 1400 Denver, Colorado 80202, and include the required information listed below.
Explanation:
Rule 1.15B(i) states that when a lawyer or LLP discovers that funds of a client or third person have mistakenly been held in a COLTAF account when circumstances actually justified the establishment of an individual trust account, the lawyer or LLP should request a refund from COLTAF. Interest refunds from COLTAF may create tax consequences for a client or third party. Lawyers and LLPs should discuss these tax consequences with their client or the third party before requesting a refund. Some clients or third parties may elect not to pursue a refund. To make an interest refund request, follow the guidance below.
Please note that COLTAF deducts from interest refunds an administrative fee of $10 per month that funds were held in the COLTAF account to cover COLTAF’s costs of administration and refund processing.
Threshold Requirements
- Verify that there was more interest generated on the funds held than the reasonably estimated cost of establishing, maintaining, and accounting for an individual trust account for the client or third party.
- The lawyer or LLP should contact their financial institution to ascertain the interest rate that was paid on their COLTAF account for each month that the funds in question were held in the COLTAF account. Tip: Do not assume that the most recent interest rate for the COLTAF account applied to each month. Banks frequently adjust their deposit product interest rates. You must verify the interest rate for each month that funds were held in the COLTAF account.
- Next, calculate, by month and in total, the interest paid on the balance that should have been held in an individual trust account. This calculation must assume simple, not compounding, interest.
- Calculate the time that would have been required for the lawyer, LLP, and/or appropriate members of staff to open and administer an individual trust account. This must include the time required to complete: account opening paperwork, at least quarterly reconciliation (more frequent if the firm’s practice is to reconcile more frequently), tax reporting, reports of account balances provided for the client or third-party, and any time that would have been spent disbursing interest payments.
- Apply the billable rate for each person who would have been involved in establishing and maintaining the individual trust account to the amount of time they would have spent on this. Add in applicable account maintenance and other fees charged by the financial institution where the individual trust account would have been held, such as a monthly account maintenance fee. Such fees must be for the account type in which the individual trust funds would have been held. Do not apply the fees associated with a COLTAF account, as COLTAF negotiates its own fee structures that do not apply to individual trust accounts. Sum all of these costs.
- Compare the calculation of total interest that would have been earned if an individual trust account had been established (from steps 1.1 to 1.2) to the total cost of establishing an individual trust account (from steps 1.3 to 1.4).
- If the total interest is less than the total cost, COLTAF will not issue a refund. No further action is needed because the requirements of Rule 1.15B(b)(i) have not been satisfied.
- If the total interest is greater than the total cost, COLTAF will consider an application for refund of interest and verify that the requirements of Rule 1.15B(b)(i) have been satisfied. Proceed to the next step.
- The lawyer or LLP must actually open an individual trust account for the benefit of the client or third party in order to receive an interest refund. If any funds belonging to the client or third party remain in the lawyer or LLP’s COLTAF account, all of those funds must be transferred to the individual trust account. If COLTAF makes an interest refund payment, the payment must be immediately placed in the individual trust account.
- Note: Individual trust accounts generate interest, which may create a tax consequence for the client or third party. Therefore, the individual trust account must be established with the tax ID of the client or third party to allow the financial institution to make appropriate reports of interest payments to the IRS. The lawyer or LLP should discuss with their client or third party the tax consequences involved before initiating an interest refund request. Clients or third parties may, in some instances, elect not to pursue a refund request.
Requesting a Refund
- Only the lawyer or LLP who is responsible for managing the client or third party funds may request a refund. The responsible lawyer or LLP must sign a letter to COLTAF requesting the refund. By signing the letter, the lawyer or LLP represents to COLTAF that the facts therein are true to the best of their knowledge.
- Direct correspondence to COLTAF ATTN: COLTAF Program Manager, 1600 Broadway, Ste 1400, Denver, Colorado 80202.
- In the letter, include your detailed calculations of interest from steps 1.1 to 1.2 and costs from steps 1.3 to 1.4. These calculations should generally be exhibits to the letter. COLTAF will verify your calculations. Estimates of staff and lawyer or LLP time required to establish and maintain an individual trust must be reasonable, and billable rates must be consistent with the firm’s billing practices.
- Include a statement verifying that the lawyer or LLP:
- has established an individual trust account for the benefit of the client or third party in question using the tax ID of the client or third party,
- has transferred any funds belonging to the client or third party from the lawyer or LLP’s COLTAF account to the individual trust account,
- will deposit any interest refund from COLTAF directly into the individual trust account,
- and will issue any applicable and necessary tax reports associated with the interest refund payment.
- Attach evidence of the establishment of an individual trust account in compliance with Rule 1.15B. This will generally take the form of an account statement, but may be in another form that establishes: the existence of an individual trust account, the name of the financial institution, and the transfer of an amount of funds equal to the balance for which an interest refund is requested (if applicable).
- Provide the name of the client or third party who will benefit from the interest refund. This is required to help COLTAF avoid making duplicative interest refund payments.
- Provide a mailing address for an interest refund check.
- Optional: Provide an email address and phone number for the responsible lawyer or LLP to allow COLTAF staff to provide faster updates on refund decisions and payment processing.
Please contact COLTAF staff before making a refund request if you have questions.
COLTAF strives to verify interest refund requests within five business days of receiving a request. However, processing times may vary based on many factors, including the amount of the refund request, the time period covered, etc. You can expedite processing by complying with all steps above. Missing or inaccurate information may result in delays or denial of an interest refund request. Decisions will be communicated in writing. COLTAF processes interest refund payments through a third-party payment processor. Processing times are generally 1-2 weeks after notice of approval of an interest refund request.
COLTAF may reduce or deny an interest refund request if the lawyer or LLP unreasonably delayed making the interest refund request. A refund request covering a period of more than two years creates a rebuttable presumption that the lawyer or LLP unreasonably delayed making the interest refund request. Lawyers or LLPs may request a waiver of the requirements listed above in their letter requesting an interest refund. However, the lawyer or LLP should explain why a waiver is appropriate under the circumstances and comports with the requirements of Rule 1.15B(b)(i). Requests to reduce COLTAF’s $10 per month administrative and processing fee must demonstrate that the individual trust account deposit product opened to hold the refund payment incurs fees of less than $10 per month.
Copies of refund request letters may be emailed to COLTAF@legalaidfoundation.org. This may allow for faster decisions and processing. However, a copy must be mailed as well.
COLTAF is authorized to establish these procedures by Colorado Rule of Professional Conduct 1.15B(i) and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15B(i), and may update these procedures from time to time. These procedures were last updated on September 24, 2026.
Answer: It depends on why and how your COLTAF account info changed.
Explanation:
- You opened a new COLTAF account.
- You must notify COLTAF of new account openings by using the Enrollment Form found here; AND
- You must also complete a new Attorney Registration Compliance Statement. The Attorney Registration Compliance Statement can be found on the Office of Attorney Regulation Counsel’s website on this page.
- You closed a COLTAF account.
- You do not need to notify COLTAF when you close a COLTAF account. It is the financial institution’s obligation to notify COLTAF of account closures.
- However, you must notify Attorney Registration of the change. The Attorney Registration Compliance Statement can be found on the Office of Attorney Regulation Counsel’s website on this page.
- Another financial institution acquired the financial institution where your COLTAF account was held.
- COLTAF does not need to be notified if your bank or credit union is acquired by another bank or credit union, as long as you opened your account at an approved institution. When financial institutions merge, the acquiring institution goes through a process to become an approved COLTAF institution. The financial institution is responsible for migrating all COLTAF accounts and communicating any corresponding changes in account numbers.
- However, you should notify Attorney Registration of the change. The Attorney Registration Compliance Statement can be found on the Office of Attorney Regulation Counsel’s website on this page.
- You changed the name on your COLTAF account.
- If the name on your COLTAF account changed, but not the account number, COLTAF does not currently require you to provide notice.
- However, you must notify Attorney Registration of the change. The Attorney Registration Compliance Statement can be found on the Office of Attorney Regulation Counsel’s website on this page.
Answer: No. Any client or third-party funds held in connection with the practice of law in Colorado must be held in a COLTAF account, not your out-of-state IOLTA account.
Explanation: Lawyers and LLPs practicing law in Colorado are subject to the Colorado Supreme Court’s authority in regulating the practice of law and disciplining lawyers and LLPs for mishandling of funds. Therefore, when you handle client or third-party funds in connection with your practice of law in Colorado, you must hold those funds in a COLTAF account. A lawyer or LLP should use good faith judgment in determining if funds are held in connection with the practice of law in Colorado. See Colorado Rule of Professional Conduct 1.15A, comment 2.
This applies to multi-jurisdiction law firms. When your firm opens an office in Colorado or has attorneys practicing law in Colorado, your firm must open a COLTAF account. See our Where to Bank Page for approved banks. Many of our approved banks have branches nationwide, which will facilitate account administration from your firm’s out-of-state headquarters. Although you may use a national bank, we still recommend opening the account at a Colorado branch. This reduces the likelihood that the bank erroneously opens the account as a non-COLTAF account.
Answer: A COLTAF account must be reconciled at least quarterly.
Explanation: The Colorado Rules of Professional Conduct require that trust account records be reconciled at least on a quarterly basis. However, this is only a minimum requirement. COLTAF strongly encourages lawyers, LLPs, and firms to reconcile their COLTAF accounts more frequently. Monthly reconciliations are recommended, since this corresponds to the frequency at which most banks issue statements. Reconciling on a monthly basis rather than quarterly reduces the number of discrepancies that can accumulate before you investigate and resolve them. Neglecting reconcilliations for longer greatly increases the chances that you mismanage your COLTAF account—don’t take that risk!
See Colorado Rule of Professional Conduct 1.15C(c) and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15C(c).
Answer: It is unethical for a lawyer, LLP, or firm to commingle their own funds with client or third-party funds. An exception applies to allow for payment of bank fees.
Explanation: While lawyers, LLPs, and firms may not generally deposit their own funds into a COLTAF account, an exception applies to allow for payment of anticipated service charges or other fees for the maintenance or operation of the COLTAF account. This includes making a required minimum deposit to open a COLTAF account. Any amount of a lawyer’s, LLP’s, or firm’s funds placed into a COLTAF account must be clearly identified in a separate ledger as part of the trust accounting records. By failing to properly record these funds in trust records, the responsible lawyer or LLP not only violates the Colorado Rules of Professional Conduct, but also risks having to forfeit the funds to COLTAF as unidentifiable funds upon the dissolution of the firm.
The Colorado Rules of Professional Conduct do not set a limit on the amount of funds that can be deposited into a COLTAF account for the purposes of covering bank service charges or fees. However, the amount must be limited to what is reasonably anticipated as necessary to cover fees and service charges. You may not deposit your own funds or the firm’s funds above what is required to cover fees in order to create a “cushion” to prevent accidental overdrafts. If you are maintaining your trust account and records ethically and are not the victim of fraud, you will not overdraft the account.
While not binding, COLTAF’s recommendation for the average practitioner is that no more than $500 should be deposited into a COLTAF account for the purpose of covering fees and service charges. Your own practice and experience may lead you to choose a different amount. However, if selecting a larger amount, consult the Colorado Rules of Professional Conduct.
See Colorado Rule of Professional Conduct 1.15B(f) or Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15B(f) for more information.
Answer: Fees paid in advance of services being performed by a lawyer or LLP are generally* considered the property of the client and must be held in a COLTAF or individual trust account until earned. Special considerations apply when the fee is a flat fee.
Explanation: Fees paid in advance of services must generally be held in a trust account and transferred to the firm’s operating account as earned–this applies to flat fees. However, portions of the flat fee may be considered earned at milestones in the matter. When a flat fee is charged, the terms of the fee must be communicated in writing before or within a reasonable time after commencing representation. The written terms of a flat fee must include information about whether any portion of the flat fee will be considered earned upon the completion of specific tasks or the occurrence of specific events. A form for flat fees is included in Colorado Rule of Professional Conduct 1.5 and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.5. Be sure to read the full rule and comments for additional context on when a flat fee may be considered earned.
Example 1: In a criminal defense matter, a lawyer and client may agree that the lawyer earns portions of the flat fee upon the lawyer’s entry of appearance, initial advisement, review of discovery, preliminary hearing, pretrial conference, disposition hearing, motions hearing, trial, and sentencing.
Example 2: In a trusts and estates matter, a lawyer and client may agree that the lawyer earns portions of the flat fee upon client consultation, legal research, completing the initial draft of testamentary documents, further client consultation, and completing the final documents.
*”Engagement retainer fees” are an exception to this rule. See Colorado Rule of Professional Conduct 1.5, Comment 16, for more information on the treatment of engagement retainer fees.
Answer: Any client or third-party funds held in connection with the practice of law in Colorado must be held in a COLTAF account, not your out-of-state IOLTA account.
Explanation: Lawyers and LLPs practicing law in Colorado are subject to the Colorado Supreme Court’s authority in regulating the practice of law and disciplining lawyers and LLPs for mishandling of funds. Therefore, when you handle client or third-party funds in connection with your practice of law in Colorado, you must hold those funds in a COLTAF account. A lawyer or LLP should use good faith judgment in determining if funds are held in connection with the practice of law in Colorado. See Colorado Rule of Professional Conduct 1.15A, comment 2.
Answer: Select an approved bank or credit union and complete our COLTAF Account Enrollment Form.
Explanation: Colorado lawyers and LLPs are only permitted to hold client and third-party funds at financial institutions approved by the Office of Attorney Regulation Counsel. You can find a list of recommended institutions here.
Once you select a bank or credit union, print out the COLTAF Account Enrollment Form and take it with you to the financial institution. The responsible lawyer or LLP will need to complete the first half of the form and the teller will complete the second half. It is extremely important that the account opening checklist on the form is completed. A teller may not skip or decline to complete any of the checklist items.
Once the account is opened and the COLTAF Account Enrollment Form has been completed, return a copy to COLTAF. Some banks will return a copy of the form as a courtesy. You must also provide the Office of Attorney Regulation Counsel with an updated Compliance Statement. OARC forms can be found here.
Answer: No.
Explanation: A COLTAF account must only hold the funds of clients or third parties, including unearned fees, prepaid expenses, settlement funds, etc. It is professional misconduct to commingle client or third party funds with funds belonging to a lawyer, LLP, or firm.
The only funds belonging to a lawyer, LLP, or firm which may be placed into a COLTAF account are funds reasonably required to meet a minimum balance or to pay fees. Such funds must be clearly identified in the firm’s accounting records. See Colorado Rule of Professional Conduct 1.15B(b)(f) and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15B(b)(f).
It is professional misconduct for a lawyer or LLP to deposit funds into a COLTAF account which are not reasonably needed to cover fees or to meet a minimum deposit requirement for the purpose of preventing overdrafts. An ethically managed COLTAF account will not overdraft and does not need a prohibited “cushion.”
Answer: No.
Explanation: It is professional misconduct for a Colorado lawyer or LLP to use a debit card to withdraw funds from a COLTAF account. See Colorado Rule of Professional Conduct 1.15C(a) and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15C(a). If your bank of credit union offers to issue a debit card for your COLTAF account, decline and report this to COLTAF immediately.
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, you must use a specialized vendor for card payment processing. Card payment processors serving lawyers or LLPs 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 in your search for a payment processor. If you use a practice management software, you may want to contact your 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.