RULE 19-414. FUNDS PRESUMED ABANDONED
West's Annotated Code of MarylandMaryland RulesEffective: October 1, 2022
Effective: October 1, 2022
MD Rules Attorneys, Rule 19-414
RULE 19-414. FUNDS PRESUMED ABANDONED
(b) Generally. Funds deposited in an attorney’s trust account pursuant to Rule 19-404 for the benefit of a client or other person are presumed abandoned if: (A) the beneficial owner affirmatively declined in writing to accept the funds, other than because of a dispute as to the amount owed; or (B) after three years from the date the funds were deposited or were required to be deposited pursuant to that Rule, the attorney is unable to determine the identity or location of the beneficial owner after having made reasonable efforts to do so.
Committee note: Reasonable efforts must commence when the attorney first has notice of a problem identifying or locating a person who may be entitled to trust account funds or other property held by the attorney. Reasonable efforts may include (1) making a diligent search for any records or information in the attorney’s file, any court file to which the attorney has access, and any published directory, available public records, estate records, or obituary records in a jurisdiction in which the attorney has reason to believe the person may reside; (2) seeking the assistance of the client and, if ethically appropriate, other attorneys, unrepresented parties, and witnesses in the case who may have information regarding the name or whereabouts of the person; (3) attempting to determine whether the person is in the custody of the Federal Bureau of Prisons, the Maryland Department of Public Safety and Correctional Services, or the local government of a jurisdiction in which the attorney has reason to believe the person may reside; (4) conducting an internet search for the person using information possessed by the attorney; and (5) attempting to contact the person by first-class mail, certified mail, and email.
Code, Commercial Law Article, § 17-306 declares, for purposes of the Maryland Uniform Disposition of Abandoned Property Act, that intangible personal property held in a fiduciary capacity for the benefit of another person is presumed abandoned unless, within three years after it becomes payable or distributable, the owner has increased or decreased the principal, accepted payment of principal or income, corresponded in writing concerning the property, or otherwise indicated an interest as evidenced by a memorandum on file with the fiduciary. That is not a workable definition with respect to attorney trust accounts. Persons who may be entitled to the payment of attorney trust account funds would not be able to increase or decrease the funds, and, if they correspond with the attorney, their identity and likely their location will be revealed. The definition in this Rule is intended to be a reasonable and practicable one that would be acceptable to the Comptroller.
(1) Upon determining that attorney trust funds are presumed abandoned pursuant to section (b) of this Rule, the attorney shall: (A) comply with Code, Commercial Law Article, § 17-308.2, and (B) prepare the requisite report and transmit it, together with the funds and any non-IOLTA accrued interest, to the State Comptroller in accordance with Code, Commercial Law Article, §§ 17-310 and 17-312.
Cross reference: See Rule 19-301.6 regarding confidential information.
Committee note: Code, Commercial Law Article, § 17-310(d) anticipates an annual report covering the period July 1 through June 30 to be filed no later than October 31.
Committee note: For several decades, a practice was in place for attorneys who have been unable to identify or locate persons entitled to trust funds received by the attorney to transfer those funds to the Client Protection Fund. The intent of this Rule is to end that practice. The sole statutory mission of the Client Protection Fund is to receive, investigate, and pay claims filed by persons injured by the misconduct of attorneys, not deal with abandoned money in attorney trust fund accounts. See Rule 19-602 (a) and Maryland State Bar Association Committee on Ethics, Ethics Docket 92-2 (1992), which states: “After the property is presumed abandoned, you, as holder, are required to file a report with the State Comptroller’s Office regarding the property.”
(d) Transfer of Funds from Client Protection Fund. On or before April 30, 2023, the Client Protection Fund shall (1) prepare the reports required by Code, Commercial Law Article, § 17-310, and (2) transmit them, together with all attorney trust account funds that, on or prior to that date, were received by the Client Protection Fund and all non-IOLTA accrued interest thereon that have not previously been paid by the Client Protection Fund to persons lawfully entitled to those funds, to the State Comptroller, in accordance with Code, Commercial Law Article, §§ 17-310 and 17-312 and applicable regulations adopted by the Comptroller.
Committee note: Notwithstanding the provisions of this Rule, Rule 19-407 requires attorneys to keep certain records pertaining to the attorney's trust accounts and to maintain those records for at least five years after the date the record was created.
[Adopted Feb. 9, 2022, eff. April 1, 2022. Amended Sept. 30, 2022, eff. Oct. 1, 2022.]
MD R Attorneys, Rule 19-414, MD R ATTORNEYS Rule 19-414
Current with amendments received through February 1, 2023. Some sections may be more current, see credits for details.
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