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What Should be Done with Funds of a Client Who No Longer Can be Located?

If you have funds in your trust account that need to be returned to a client (known as “stale funds”), you first need to exercise due diligence to locate the client and attempt to return the funds to them or, in the case of a client’s death, their estate.  If the client’s whereabouts are known but checks have gone uncashed, issuance of a certified check should be considered.  If the client cannot be located, those monies should be considered unclaimed property and remitted to the Great Iowa Treasure Hunt.            

Tip:  Iowa Rule of Professional Conduct 32:1.15(d) requires that attorneys promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive.  Ideally that would happen immediately at the conclusion of a matter, however that isn't always possible. Client Security's rule of thumb for prompt return is no more than six months for outstanding checks, and no more than one year for inactive client balances.   A regular quarterly or biannual review process for stale checks and client balances is strongly recommended, so that due diligence can be undertaken and the sub-account can be zeroed out within that 6mo/1yr time frame.         

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