How settlement funds are delivered and handled in Massachusetts

Short answer: How you receive settlement money depends on who the check is made payable to and whether an attorney, medical creditor, guardian, or government program has a legal interest. If your attorney represents you, the firm commonly receives and deposits the check to a client trust (IOLTA) account, clears liens and fees, and then releases your share by check, wire, or direct deposit. If the check is payable only to you, you can endorse and deposit it yourself. This article explains typical scenarios under Massachusetts practice and the rules that guide attorneys handling client funds.

Detailed answer — step‑by‑step and legal background

1. Who is the check payable to?

The very first thing to check on the check or release paperwork is the payee line. Common outcomes:

• Payable only to you (the claimant): You can endorse and deposit it into your personal account. If your attorney handled settlement negotiations but the insurer issued the check to you alone, the insurer likely expects you to sign the release and endorse the check. If a third party (medical provider) has a lien, the insurer may still require proof the lien will be satisfied before issuing funds.
• Payable to you and your attorney (joint payees): Most firms require endorsement by both you and the attorney. Attorneys normally deposit joint-payee checks into their client trust (IOLTA) account first and then issue a client disbursement after clearing liens and deducting agreed fees/expenses.
• Payable to multiple parties (hospital, lienholder, etc.): Each payee must endorse the check or sign releases. That often requires the parties to coordinate before funds can be cashed or deposited.
• Payable to an estate, guardian, or conservator: If the claimant is a minor, incapacitated, or deceased, the personal representative, guardian or conservator (appointed by Probate & Family Court) must endorse or obtain a court order to collect funds.

2. If an attorney receives the check: trust account rules and accounting

When an attorney receives settlement funds on your behalf, Massachusetts rules require the lawyer to safeguard client funds and keep them separate from the lawyer’s own money. See the Massachusetts Rules of Professional Conduct (Rule 1.15) on safekeeping client property: https://www.mass.gov/info-details/massachusetts-rules-of-professional-conduct. The lawyer typically:

• Deposits the funds into the firm’s client trust (IOLTA) account upon receipt.
• Pays any outstanding liens, vendor bills, subrogation demands, or other valid claims (if authorized or required).
• Deduces the agreed contingency fee and any case-related expenses (with an itemized accounting to you).
• Disburses your net share by check or electronic transfer.

The Massachusetts IOLTA program and guidance are administered by the courts: https://www.mass.gov/interest-on-lawyers-trust-accounts-iolta.

3. Joint-payee or lien situations commonly cause the biggest delays

If the insurer makes the check payable to you and one or more creditors (medical providers, hospitals, subrogated insurer), those parties must either endorse the check or sign a release authorizing payment to others. Hospitals and providers sometimes refuse to endorse and instead request payment directly or a settlement statement showing distribution. That coordination causes delays until everyone signs.

4. Banks, holds, and timing

Banks may place a hold on deposited settlement checks while they verify them. The rules governing negotiable instruments and bank procedures are based on the Uniform Commercial Code, adopted in Massachusetts as Chapter 106 of the General Laws: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter106. Expect a short clearance period before funds are available.

5. Special situations: minors, incapacitated persons, and decedents

If the claimant is a minor or incapacitated, the probate court typically requires a guardian or conservator to collect and manage settlement funds. If the claimant is deceased, the estate’s personal representative handles the settlement distribution under Probate & Family Court supervision. For forms and local instructions, see the Massachusetts Probate & Family Court: https://www.mass.gov/orgs/probate-and-family-court.

6. Taxes and reporting

Tax treatment of settlement proceeds varies by the nature of the damages (e.g., personal physical injury vs. lost wages) and by federal law, not state procedural law. Consult a tax professional about whether your settlement is taxable and whether you should expect information returns (e.g., 1099s) from the payer. Attorneys do not give tax advice unless they are tax practitioners—ask your lawyer and your tax advisor before making tax decisions.

7. What you should receive from your attorney when funds are disbursed

• An itemized settlement statement showing gross recovery, attorney fees, expenses, lien payments, and your net proceeds.
• A copy of the signed release and any lien satisfaction letters, if applicable.
• The actual disbursement to you (check or electronic transfer) and instructions for any further steps you must take.

Helpful Hints — practical tips to speed receipt of your money

• Read the payee line on the check and the settlement documents closely right away.
• Ask your attorney in advance how the firm handles settlement checks, where they will deposit them, and how and when you will receive your net proceeds.
• Request an itemized accounting before the firm disburses funds. Confirm all liens and debts the firm plans to pay.
• If you expect a large personal disbursement, provide your attorney with current bank wiring instructions early to avoid delays.
• If the check is payable to multiple parties, ask your attorney to coordinate release agreements or lien satisfactions so payees will endorse or authorize payment promptly.
• If Medicare, MassHealth, or other government programs might have a claim, notify your attorney immediately—those claims often require separate handling and can delay payment.
• Keep copies of your settlement, releases, and the final accounting for tax and recordkeeping purposes.
• If you suspect improper handling of your settlement funds by a lawyer, review the Massachusetts Rules of Professional Conduct and consider contacting the Board of Bar Overseers or the state courts for guidance.

Where to look for official rules and help in Massachusetts

• Massachusetts Rules of Professional Conduct (attorney safekeeping obligations): https://www.mass.gov/info-details/massachusetts-rules-of-professional-conduct
• Massachusetts IOLTA program: https://www.mass.gov/interest-on-lawyers-trust-accounts-iolta
• Massachusetts General Laws (UCC/negotiable instruments), Chapter 106: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter106
• Massachusetts Probate & Family Court (guardians, conservators, estates): https://www.mass.gov/orgs/probate-and-family-court

Final practical note: Most settlement delays result from payee coordination (joint-payee checks), lien resolution, or bank holds. Clear communication with your attorney and providing requested documents quickly usually speeds payment.

Disclaimer: This article explains general Massachusetts practice and law for educational purposes only. This is not legal advice. For guidance about your particular case, consult a licensed Massachusetts attorney or other appropriate professional.