Detailed answer
This explains how settlement money typically reaches a client in Montana and what steps happen after an insurance company issues a settlement check. The process below describes common practices under Montana law and professional rules that govern attorneys who receive client funds. This is educational information only and not legal advice.
Who the check is payable to
When an insurer issues a settlement check, the payee line controls the next steps:
- If the check is payable only to you (the claimant), you will generally receive and endorse the check yourself and deposit it into your personal account. If medical providers, Medicare, or other parties hold liens, you will usually need to arrange payment of those liens from the settlement proceeds before keeping the net amount.
- If the check is payable to you and your attorney (or to your attorney only), the attorney will normally endorse and deposit the check into the attorney’s client trust account (sometimes called an IOLTA) before paying liens, costs, fees, and the net to you.
- If the claimant is a minor or legally incapacitated, the insurer may require a guardian, conservator, or court approval before issuing funds. Montana probate/guardianship rules control how money for minors/incapacitated persons is handled.
Attorney handling: trust account, accounting, and payment order
If your attorney receives the check, Montana’s professional rules require attorneys to safeguard client property and to keep client funds separate from firm operating funds. That means an attorney must deposit the settlement check into a client trust account and provide you with a written accounting before and after distribution.
Typical disbursement order when an attorney holds the funds:
- Deposit into attorney trust account and wait for the check to fully clear.
- Pay outstanding liens and subrogation claims (for example: medical providers, Medicare/Medicaid, health insurers who have a right to recovery).
- Reimburse client-authorized costs advanced by the law firm (filing fees, expert fees, deposition costs, etc.).
- Deduct the attorney’s fee according to your fee agreement (often a contingency percentage).
- Issue the remaining net proceeds to you with an itemized accounting (a settlement statement) showing all deductions.
Liens, subrogation, and third-party claims
Medical providers, Medicare/Medicaid, or private health insurers may have liens or subrogation claims against settlement funds. In many cases, these entities will demand payment from the settlement before you receive your net. Your attorney typically negotiates or resolves lien amounts and pays them out of the settlement trust account. Montana-specific lien rules and federal Medicare recovery rules can affect how much you ultimately receive.
Timing: when you actually receive cash
Timing varies. Common factors that affect when you get your net settlement:
- Bank clearing time: the deposit must clear. Attorneys usually wait until the bank confirms funds are available before making distributions.
- Complex lien resolution: negotiating or satisfying liens can take days to weeks.
- Court approvals, guardianship or minor settlement requirements: these add additional time if applicable.
Expect anywhere from a few days to several weeks in many routine matters. If the insurer issued a joint-payee check listing you and your attorney, the attorney generally must receive and clear the funds before distribution.
Special situations to be aware of
- Joint-payee checks: Banks may refuse to accept a joint-payee check without all endorsements. If your attorney was named as a payee, your attorney will typically endorse and deposit it into the trust account.
- Creditors and judgments: other judgments or writs against your funds could lead to garnishment or interruption of distribution.
- Tax treatment: portions of a personal injury settlement such as compensation for lost wages or punitive damages can have tax implications. You may receive a Form 1099 from an insurer or other payor; check with a tax professional about reporting requirements.
- Structured settlements: if you or the insurer prefers periodic payments rather than a lump sum, a structured settlement needs separate setup with an annuity provider.
What you should receive from your attorney
When an attorney disburses settlement funds to you, request and expect the following in writing:
- An itemized settlement statement showing gross settlement, attorney fees, costs advanced, lien payments, and net to you.
- A copy of any lien release or reimbursement agreement used to satisfy a third-party claim.
- Confirmation of the method of payment to you (check, electronic transfer) and any expected timing.
Where Montana law and rules matter
Rules that require attorneys to safekeep client funds and to provide accountings govern how attorneys must treat settlement checks they receive. For Montana statutory materials and the Montana Code Annotated, see the Montana Legislature’s official site: Montana Code Annotated (MCA) – Table of Contents. For professional conduct rules about safekeeping client property, consult the Montana rules of professional conduct and applicable Montana Supreme Court authority or your attorney for specifics.
When to contact an attorney or ask questions
If you are unsure about payees on the check, have potential lienholders (for example Medicare), or need help negotiating liens or structuring a distribution, talk to a licensed Montana attorney experienced in settlements and insurance claims. If your attorney refuses to provide a timely accounting or you suspect mishandling of funds, you may contact the appropriate Montana disciplinary or regulatory authority.
Helpful Hints
- Do not sign or endorse a settlement check if you don’t understand who else is named on the check or why—ask your attorney to explain.
- Get everything in writing: demand a written settlement statement showing how the gross settlement becomes the net you will receive.
- Ask your attorney how medical liens, Medicare, or other subrogation claims will be handled before accepting the settlement.
- If you are a minor or incapacitated, ask whether court approval is required and how long that process typically takes in Montana.
- Keep copies of all documents: check stub, settlement agreement, releases, and the final disbursement statement for tax and future reference.
- If urgent bills depend on the settlement proceeds, tell your attorney immediately—sometimes interim arrangements or advances can be negotiated.
- Before signing a release, understand whether the release affects other potential claims or benefits (like workers’ compensation or Social Security). Ask how the disbursement will affect benefits.
This article provides general information about common practices and Montana legal rules that govern the handling of settlement funds. It does not provide legal advice. For guidance specific to your situation, contact a licensed Montana attorney.