Paymaster
Encyclopedia
A paymaster often is, but is not required to be, a lawyer (also known as a 'lawyer paymaster'). When dealing with commission payments on contracts dealing with large amounts of money (such as Oil, Gas, Steel, Iron, Gold, MTN
's, VG's, T-Strips, and other instruments), most banks in the United States are very wary of handling such large amounts of money. In addition, most buyers and sellers of such transactions want to place the money with a neutral third
party for disbursement. In most cases it is required by the buyer and/or seller involved in the transaction that a paymaster be named to handle all incoming and outgoing funds.
This is where the paymaster comes in. A paymaster is typically a neutral third party (not directly involved with the transaction) who handles the incoming commissions, and then disburses the funds accordingly. In return for his services the paymaster charges a small fee, which is paid directly to him out of the commission proceeds prior to disbursement.
In the United States, there is no licensing requirement to be a paymaster. However, a paymaster often is a licensed lawyer, due to the security and safety issue that lawyers in the U.S. are required to hold any funds that do not belong directly to them in a "Attorney's Trust Account" (also known as an IOLTA
account), which is monitored by the state bar, in the state in which the lawyer practices.
Medium Term Note
A medium-term note is a debt note that usually matures in 5–10 years, but the term may be less than one year or as long as 50 years. They can be issued on a fixed or floating coupon basis...
's, VG's, T-Strips, and other instruments), most banks in the United States are very wary of handling such large amounts of money. In addition, most buyers and sellers of such transactions want to place the money with a neutral third
Neutral third
A neutral third is a musical interval wider than a minor third but narrower than a major third . Three distinct intervals may be termed neutral thirds:...
party for disbursement. In most cases it is required by the buyer and/or seller involved in the transaction that a paymaster be named to handle all incoming and outgoing funds.
This is where the paymaster comes in. A paymaster is typically a neutral third party (not directly involved with the transaction) who handles the incoming commissions, and then disburses the funds accordingly. In return for his services the paymaster charges a small fee, which is paid directly to him out of the commission proceeds prior to disbursement.
In the United States, there is no licensing requirement to be a paymaster. However, a paymaster often is a licensed lawyer, due to the security and safety issue that lawyers in the U.S. are required to hold any funds that do not belong directly to them in a "Attorney's Trust Account" (also known as an IOLTA
Interest on lawyer trust accounts
Interest on Lawyer Trust Accounts is a method of raising money for charitable purposes, primarily the provision of civil legal services to indigent persons, through the use of interest earned on certain lawyer trust accounts...
account), which is monitored by the state bar, in the state in which the lawyer practices.