Detailed Answer

This explains, in plain language, how settlement money typically reaches an injured person in Virginia after an insurer issues a check. It covers who the check is usually made payable to, what steps happen next, common deductions, timing, and special situations (minors, liens, Medicare).

Who the check is payable to

Insurance checks are commonly made payable to one or more of the following: the injured person (the claimant), the claimant and the claimant’s attorney jointly, or the claimant plus other parties with a legal interest (for example, a medical provider with a lien). If your attorney handled the claim and the fee arrangement provides for a contingency fee, the insurer often includes the attorney’s name on the check.

Why a check may be made to both you and your attorney

When both names are on the check, banks will usually require both endorsements to cash or deposit it. Lawyers routinely ask clients to turn such checks over to the attorney so the lawyer can endorse and deposit the funds into a client trust account, clear any liens or costs, and then distribute the client’s net recovery. This practice helps ensure the attorney follows the rules for safekeeping client funds and disbursing fees and costs properly.

Attorney trust accounts and safekeeping

Virginia lawyers must follow rules about safekeeping client property and handling client trust funds. These rules govern how attorneys deposit, hold, account for, and disburse settlement money. For an overview of state law, see the Virginia Code main site: Virginia Code (vacode). For attorney rules related to client funds, a helpful starting place is the Virginia Code section group for professional regulation and client funds: Title 54.1, Chapter 39 (Virginia Code).

Typical step-by-step process

1. Release and settlement agreement: You generally sign a release and settlement agreement before the insurer issues payment. That document often specifies the payees and how payment will be made.
2. Insurer issues the check: The insurer sends the check to whoever the release names — often the claimant and the attorney.
3. Endorsement and deposit: If the attorney is named, you or the attorney endorse and deposit the check into the attorney’s client trust account (also called an IOLTA) if required. If the check is only to you, you may deposit it yourself or give it to your attorney if there are outstanding fees, costs, or liens.
4. Clearing and resolving liens/subrogation: Before distribution, the lawyer typically resolves any valid liens (medical providers, health insurers, Medicare/Medicaid subrogation, or other claimants). That may require negotiation and payment out of the settlement proceeds.
5. Distribution of net proceeds: After fees, costs, and any liens are paid, the lawyer sends you the remaining money — often by check or by wire transfer according to your preference and the attorney’s office procedures.

What can be deducted from your settlement before you get paid

• Attorney fees and costs (if you signed a fee agreement).
• Valid medical liens and hospital bills that have legal priority.
• Health insurer or workers’ compensation subrogation claims, when applicable.
• Any court-approved costs or statutory liens.

Timing — how long until you see money?

Timing varies. Once the insurer issues a check, it can take anywhere from a few business days to several weeks for you to receive net funds. Common delays include:

• Joint-payee checks that require multiple endorsements.
• Time for the attorney to clear the check and confirm no disputes.
• Negotiating or resolving medical liens or subrogation claims.
• Court approval delays when the claimant is a minor or incapacitated person.

Special situations

Minors or incapacitated claimants

Virginia often requires court approval for settlements on behalf of minors or legally incapacitated people. When a court must approve, the funds often go into a blocked or supervised account until the court signs off on the distribution. Speak with your attorney or guardian ad litem about the specific court steps.

Government healthcare (Medicare/Medicaid)

If Medicare or Medicaid has paid medical bills related to your injury, those programs may have a right to repayment (a lien or Medicare’s conditional payment recovery). Federal law and state procedures can require repayment from your settlement before you receive net funds. Be sure your attorney understands Medicare Secondary Payer rules and how to resolve those claims.

Lien disputes

If a medical provider, insurer, or other party claims a larger share than you expect, your attorney can negotiate or seek court intervention. Do not sign a release or cash a check until you understand who will be paid from the settlement.

How you will actually receive the money

Common methods of receiving net proceeds:

• Attorney’s office issues a client-check after clearing funds and paying liens and costs.
• Direct deposit or wire to your bank account (some firms offer this option).
• Cashier’s check from the attorney’s trust account for large distributions.
• If funds are held in a blocked account (court-required), the court orders the bank to release the funds per the approved distribution schedule.

Tax considerations

Most personal injury compensatory awards for physical injuries are not taxable at the federal level, but there are exceptions (punitive damages or interest). You may receive a Form 1099 in some circumstances if portions of the settlement are reportable. Talk with an accountant or tax advisor before finalizing tax treatment.

Practical tips

• Ask your attorney for a written breakdown showing gross settlement, attorney fees, costs, liens, and the net amount you will receive.
• Confirm how the attorney will deliver your net proceeds (check, wire, or pickup) and how long it will take after the insurer issues payment.
• Do not sign a final release or cash a check until you are certain liens and subrogation obligations are resolved.

If you want to read Virginia laws about attorney conduct and client funds, a starting point is Title 54.1 of the Virginia Code and the material state pages: https://law.lis.virginia.gov/vacode/title54.1/ and https://law.lis.virginia.gov/vacode/title54.1/chapter39/. For help with court-ordered settlements involving minors or incapacitated persons, consult the relevant civil procedure sections of the Virginia Code at https://law.lis.virginia.gov/vacode/.

Disclaimer: This information is educational and not legal advice. For advice about your specific situation, consult a qualified Virginia attorney before signing releases or endorsing settlement checks.

Helpful Hints

• Get a written allocation and disbursement statement from your lawyer before the insurer sends payment.
• If the check names both you and your lawyer, hand it to your lawyer promptly so they can deposit it into the trust account and start lien resolution.
• Ask whether Medicare, Medicaid, or a private insurer has conditional payments—these can reduce your net recovery if not handled correctly.
• Keep copies of every settlement document, endorsed check, bank receipt, and correspondence about liens and subrogation.
• If you’re a minor or incapacitated person, expect court steps and delays; budget extra time for court approval and release of funds.
• Before accepting money, ask whether any portion of the settlement is taxable and whether the lawyer will issue Form 1099 or other tax documents.
• If anything about the payment or distribution seems unclear or unfair, ask the attorney to put the explanation in writing or speak with another lawyer for a second opinion.