How settlement funds are delivered and what to expect

Short answer: After an insurer issues a settlement check in South Dakota, the check can be sent to you, to your attorney, or to both payees. Before you receive your net money, several steps commonly occur: the insurer may require a signed release, your attorney may forward the check to a client trust (escrow) account, outstanding liens and fees must be resolved, and cleared funds are distributed to you by check or electronic transfer. The exact path depends on who the check is payable to, whether any liens or subrogation claims exist, and whether a guardian or court approval is required.

Detailed answer

This section explains the mechanics of receiving settlement funds in South Dakota, common issues that delay payment, and what you should expect step‑by‑step. This is general information only and is not legal advice.

1) Who is the check payable to?

• If the insurer makes the check payable to you alone: you generally must sign a release (a document giving up legal claims) and then endorse the check and deposit it. Insurers usually require the release before issuing the check or before allowing you to cash it.
• If the check is payable to you and your attorney (or to your attorney alone): ethically and commonly your attorney will receive the check, deposit it into the firm’s client trust/escrow account, deduct the agreed legal fee and any case expenses, resolve any liens, and then send you the remaining (net) funds.
• If the check names multiple claimants (for example, you and another injured person) all payees must endorse the check before it can be negotiated.

2) Why do many settlement checks go to attorneys first?

When an attorney represents you, insurers often pay the attorney directly or jointly to simplify handling of attorney fees and case expenses. South Dakota attorneys are required by professional rules to keep client funds in trust accounts and to account for distributions. That process protects both client and attorney and ensures liens and bills are paid before you receive net proceeds.

3) What happens at the law office after they receive the check?

1. Deposit into trust account: The check is usually deposited into the attorney’s client trust (escrow) account.
2. Clearance: The bank must clear the funds. This can take several business days depending on the bank and amount.
3. Pay liens and bills: The attorney will identify outstanding liens (medical providers, health insurers, Medicare/Medicaid subrogation, or private liens) and attempt to negotiate or pay them from settlement funds.
4. Deduct fees and expenses: The attorney deducts the agreed contingency fee and any authorized case expenses (e.g., expert fees, filing fees). The attorney should provide a written accounting or settlement statement showing deductions and the net payable to you.
5. Issue net payment: After accounting and lien resolution, the attorney issues your net proceeds by check or wire transfer, and provides copies of releases and final accounting documents.

4) Common sources of delay

• Required signed release: Insurance companies frequently require original signed releases and related paperwork before negotiating or paying funds.
• Bank clearance rules: Large checks may be held longer by banks.
• Liens and subrogation: Medical providers, health insurers, and government payors (like Medicare/Medicaid) may assert rights to part of the settlement. Resolving these can take time.
• Multiple payees: If others must endorse the check, locating and obtaining their endorsements can delay negotiation.
• Minors or incapacitated persons: Court approval or appointment of a conservator/guardian may be required before funds can be released for a protected party.

5) Special situations

• Minor or legally incapacitated claimant: Settlements for minors or incapacitated persons sometimes require a court order approving the settlement or appointment of a guardian/conservator to receive funds. Your attorney will advise whether court involvement is necessary and how to proceed.
• Structured settlements and annuities: Instead of a lump sum, you and the insurer may agree to periodic payments purchased through an annuity. That requires separate paperwork and time to set up.
• Checks payable to health care providers, government entities, or lienholders: These payees must endorse and/or release their claims. Some providers will accept a reduced payoff; others will seek full payment.
• Electronic payments: Increasingly insurers can issue settlement via electronic funds transfer (EFT) directly to the attorney’s trust account. The same rules about accounting and liens still apply.

6) What you should receive from your attorney when funds are distributed

• An itemized settlement statement showing gross recovery, attorney fees, case costs, lien payments, and net to you.
• Copies of releases signed and any lien release or payoff letters secured on your behalf.
• A client check or electronic transfer for your net funds and instructions about tax reporting (if applicable).

7) Practical steps you should take

• Ask your attorney for a written timeline for producing the net check and for an itemized accounting.
• Confirm who the insurer will make the check payable to and when you will receive the release documents.
• Ask about liens early—if you have health insurance or received medical care, ask how those bills will be handled.
• If you are a minor or have a guardian, ask whether court approval is needed and how long that process will take.
• Keep copies of all settlement documents and accounting for your records and taxes.

South Dakota legal notes and where to look

South Dakota has statutes and court rules that govern banking, guardianship, and court‑supervised settlements, and the South Dakota Rules of Professional Conduct govern how attorneys handle client trust funds. For the precise statutory language and procedures that may apply to your situation, consult the South Dakota Codified Laws: https://sdlegislature.gov/. If your case involves Medicare, Medicaid, or federal interests, separate federal rules may require repayment of conditional payments or affect how liens are resolved.

Helpful Hints

• Get an itemized settlement breakdown in writing before the check is negotiated.
• Ask whether the firm will wire your net funds or issue a check and whether there are wire fees.
• Ask whether the settlement check will be sent to you or the attorney, and confirm how the attorney will handle the trust account deposit and accounting.
• If a lien exists (medical providers, insurers, or government payors), ask how the attorney plans to resolve or negotiate it and whether you may be personally responsible for any shortfall.
• If you are under 18 or legally incapacitated, ask early whether the court must approve the settlement—this step can add weeks or months.
• Retain copies of your release and all settlement paperwork. Those documents explain what claims you gave up and are important if a dispute later arises.
• If you don’t understand charges or holdbacks, ask for clarification. You have a right to a clear accounting of your case funds.

Disclaimer: This article is informational only and does not constitute legal advice. It does not create an attorney‑client relationship. For advice tailored to your situation, consult a licensed South Dakota attorney who can review your facts and applicable law.