There are several avenues for receiving the compensation owed you in your personal injury case. The California personal injury attorneys with Ernst Law Group can help you decide which payout method is best for you and ask that your preferred method of payment be included in the settlement terms.
Methods of settlement payouts
A lump sum payout is just what it sounds like: you receive the money all at once. This permits you full control over the entire amount and may be useful if you have high medical bills and wish to pay off all your medical debt.
While a lump sum option gives you immediate control over all of your money, some plaintiffs may mismanage the funds. Placing the settlement in a trust is one option for mitigating this problem if a lump sum payment was agreed upon by all parties. A structured settlement can also help with this issue.
A structured settlement pays the award in regular or structured allotments, generally through the purchase of an annuity. With some structured settlement agreements, the plaintiff can ask for specific payouts upfront to cover costs like outstanding medical bills or those that were taken on an attorney lien and attorney’s fees, then the remainder is paid out over time.
A structured settlement is useful for very large personal injury settlements or awards because it can guarantee that you have funds available to you in the future to assist with your medical bills and to cover any gaps in income if your injury has reduced your ability to work.
Who pays the settlement
In a personal injury lawsuit, the settlement is often paid by the at-fault party’s insurance company. However, the at-fault party themselves may be responsible for all or a portion of the settlement if they didn’t have an insurance policy or if their policy limits were insufficient to cover the entire amount. The latter is a situation where a structured settlement arrangement and the purchase of an annuity might be helpful.
If the insurance company is paying the entire amount, then the funds will be sent to your attorney’s office “in care of” you. Your attorney will place those funds in a protected and heavily regulated client trust or IOLTA account. Your attorney will then disburse payments in accordance with your attorney-client contract to:
- Pay their legal and expert fees and court costs and other expenses such as deposition and transcripts.
- Pay medical bills for treatment you received on an attorney lien.
- Other expenses as stated in your contract. For example, your auto insurance might be owed reimbursement for advancing the costs to repair your vehicle.
After those payments are issued, your attorney will write you a check for the remaining sum of your settlement. If you have other outstanding bills for treatment not provided on a lien, you’ll be responsible for paying those costs with your settlement funds. You can ask your attorney to issue payment for those expenses before you receive your distribution of the settlement for peace of mind that it’s all been paid.
Tips for protecting your settlement
It might be beneficial to establish a separate bank account for your settlement funds to avoid commingling them with your personal funds and to add an extra layer of protection to preserve those funds for the future. There are several high-interest or high-yield savings accounts that you can take advantage of to help grow those funds without the risks associated with stock investments.
It’s recommended that you meet with a financial planner to discuss ways to protect and grow your settlement to make it a valuable long-term investment that you can turn to for future medical needs. The California personal injury attorneys with Ernst Law Group can help guide you toward choosing an experienced and trustworthy financial planner to assist you with those endeavors.
Do you need representation in a California personal injury claim?
At Ernst Law Group, our California personal injury attorneys have been serving California for four decades, representing clients who’ve been harmed by someone’s negligence. We’re ready to put our skills to work for you to help you get maximum compensation for your injuries.
Call us at (805) 541-0300 for a free case review.