Florida Senate - 2025 CS for SB 498
By the Committee on Judiciary; and Senator Grall
590-02314-25 2025498c1
1 A bill to be entitled
2 An act relating to trust fund interest for purposes
3 approved by the Supreme Court; creating s. 655.97,
4 F.S.; authorizing financial institutions to hold funds
5 in specified trust accounts to be used for specified
6 purposes; requiring such financial institutions to
7 quarterly select a certain interest rate alternative
8 for a specified purpose; providing requirements for
9 such interest rate alternatives; requiring a financial
10 institution to submit a rate validation sheet and
11 affidavit to the Chief Financial Officer within a
12 specified timeframe attesting it will pay a certain
13 interest rate; requiring that the affidavit attest
14 that certain information is true and factual;
15 requiring the Chief Financial Officer to verify
16 certain information; requiring the Chief Financial
17 Officer to determine, at specified intervals, the
18 interest rate of a specified interest rate
19 alternative; providing that such rates are effective
20 on specified dates; requiring the Chief Financial
21 Officer to inform a certain entity of the determined
22 interest rate within a specified timeframe; providing
23 applicability; providing an effective date.
24
25 WHEREAS, in September 1981, the Florida Supreme Court
26 implemented the nation’s first Interest on Trust Accounts (IOTA)
27 program, establishing a vital funding source for civil legal
28 aid, justice system improvements, and public service programs
29 for law students, and
30 WHEREAS, Funding Florida Legal Aid (FFLA), formerly known
31 as The Florida Bar Foundation, and the Florida Bankers
32 Association have cooperated for decades to sustain the program
33 and encourage participation, and
34 WHEREAS, in March 2023, the Florida Supreme Court adopted
35 new rules requiring lawyers to secure interest rates based on
36 the Wall Street Journal Prime Rate, compelling banks to pay
37 higher rates for IOTA accounts than for other similar accounts,
38 and
39 WHEREAS, 44 states, the District of Columbia, and Puerto
40 Rico have mandatory IOTA programs modeled after Florida’s pre
41 2023 system, while 5 states and the U.S. Virgin Islands operate
42 voluntary or opt-out programs, and
43 WHEREAS, the 2023 rule change made Florida an outlier
44 compared to other jurisdictions where IOTA rates are typically
45 benchmarked against interest-bearing checking account rates, and
46 WHEREAS, the Wall Street Journal Prime Rate serves as a
47 benchmark for lending and is not used to set deposit account
48 rates, and
49 WHEREAS, the 2023 rule change resulted in banks paying
50 higher rates on funds in IOTA accounts, resulting in record
51 revenues, exceeding $279 million, paid to FFLA during the 2023
52 2024 fiscal year, nearly four times the prior peak rate and far
53 exceeding average annual interest revenues, and
54 WHEREAS, in October 2024, the Florida Supreme Court
55 authorized FFLA to hold nearly $143 million in reserve, and
56 WHEREAS, it is in the best interests of this state for the
57 Legislature to establish statutory benchmarks for IOTA rates to
58 ensure regulatory safety, fairness, and sustainability, similar
59 to the quarterly interest rate determinations made by the Chief
60 Financial Officer for interest paid on court judgments, NOW,
61 THEREFORE,
62
63 Be It Enacted by the Legislature of the State of Florida:
64
65 Section 1. Section 655.97, Florida Statutes, is created to
66 read:
67 655.97 Lawyer or law firm trust account interest rates.—
68 (1) A financial institution may hold funds in an interest
69 bearing trust account of a lawyer or law firm in which the
70 institution remits interest or dividends on the balance of the
71 deposited funds to an entity established by the Supreme Court
72 for the purpose of providing or facilitating the provision of
73 free legal services to low-income individuals or for other
74 purposes authorized by the Supreme Court. If the institution
75 holds such an account, it must quarterly select one of the
76 following interest rate alternatives to determine the interest
77 it will pay to the entity established by the Supreme Court:
78 (a) The first interest rate alternative must be set at the
79 highest interest rate or dividend generally available from the
80 institution to its comparable business or consumer accounts or
81 nonmaturing deposit accounts, provided that the trust account
82 meets or exceeds the same minimum balance or other account
83 requirements.
84 1. If a financial institution chooses to pay the rate
85 alternative provided in this paragraph, it must submit a rate
86 validation sheet and affidavit to the Chief Financial Officer by
87 the tenth day of each quarter attesting that it will pay at
88 least the same interest on the lawyer or law firm trust accounts
89 that it is paying on its comparable business or consumer
90 accounts or nonmaturing deposit accounts.
91 2. The affidavit must attest that the rate information
92 submitted on the rate validation sheet is true and factual.
93 3. The Chief Financial Officer shall verify that the rate
94 validation sheet and affidavit have been received by the
95 Department of Financial Services.
96 (b) The second interest rate alternative must be set at 25
97 percent of the federal funds target rate determined by the
98 Federal Open Market Committee of the Federal Reserve System or
99 0.25 percent, whichever is higher, net of fees.
100 1. Each December 1, March 1, June 1, and September 1, the
101 Chief Financial Officer shall determine the interest rate of the
102 second interest rate alternative. The rate alternative
103 determined by the Chief Financial Officer is effective on the
104 following January 1, April 1, July 1, and October 1,
105 respectively.
106 2. Within 3 days after determining the interest rate under
107 this paragraph, the Chief Financial Officer shall inform the
108 entity established by the Supreme Court of the determined
109 interest rate for the upcoming quarter.
110 (2) This section does not apply to interest rates
111 established by written contract or obligations unrelated to the
112 trust accounts described by this section.
113 Section 2. This act shall take effect upon becoming a law.