Your Car Accident Settlement Check: Who It Is Made Out To, Where It Goes and When You Get Paid

If you have a lawyer, the settlement check usually goes into the lawyer’s client trust account, and fees, case costs and liens are paid from it before your share is released. In California the insurer generally must pay within 30 days of accepting the claim and receiving the signed release (10 CCR 2695.7(h)), and your lawyer generally must tell you within 14 days that the money arrived.

Who is the settlement check made out to?

When you have a lawyer, insurers commonly make the check payable to you and the law firm together, and some add a lienholder such as a hospital. The reason is legal risk. In Texas, for example, a release is not valid against a hospital that filed a lien unless the hospital’s charges were paid or the hospital is a party to the release, under section 55.007 of the Property Code. Federal rules let Medicare recover its payments from anyone who received the settlement money, including the attorney, under 42 CFR 411.24. Naming several payees is how the insurer protects itself.

If you handled the claim yourself, the check is usually made out to you alone, and repaying any lien becomes your job.

Why does the money go into a trust account first?

A client trust account is a bank account that holds money belonging to clients, kept separate from the firm’s own money. All three states require it.

• California. Rule 1.15 requires client funds to go into an account labeled as a trust account. The lawyer must notify you within 14 days of receiving funds you have an interest in, absent good cause, must account to you in writing, and must promptly pay out any undisputed funds you are entitled to.
• Texas. The safekeeping rule, explained in the State Bar of Texas guide to client trust accounts, requires a separate trust or escrow account, prompt notice when funds arrive and prompt delivery of what the client is entitled to receive.
• Washington. RPC 1.15A requires prompt notice, a written accounting after distribution, and prompt payment of undisputed amounts. It also generally bars paying out of the trust account until the deposit has cleared the bank.

In every state, if someone disputes part of the money, only that part stays in trust until the dispute is resolved. The rest is paid out.

What gets paid before I receive my share?

Three groups are usually paid out of the same check.

1. Attorney fees and case costs, under your written fee agreement. California requires a contingency fee agreement to state the percentage and how costs affect your recovery, according to the State Bar’s fee agreement instructions on Business and Professions Code section 6147. In Texas the contract must be in writing and signed by the attorney and client (Government Code 82.065). Washington requires a writing signed by the client (RPC 1.5(c)).
2. Liens and reimbursement claims. Medicare, Medi-Cal and other Medicaid programs, health plans, hospitals and some doctors may have a legal right to be repaid.
3. Your net share, which is what remains.

Lien amounts are often negotiable. Some are capped by law. A Texas hospital lien is generally limited to the lesser of certain hospital charges or 50 percent of the recovery under Property Code 55.004. In Washington, RCW 60.44.010 limits provider liens to 25 percent of the settlement.

Example only. Suppose a claim settles for $50,000. A written breakdown would list the fee set by the signed agreement, each case cost with a receipt, each lien with its final payoff letter, and the remainder paid to you. The real numbers depend on your agreement and your lien letters, so ask for the breakdown in writing before you sign anything.

How long until I actually get paid?

Two clocks run back to back. The first is the insurer’s. In California, once the claim is accepted and the signed release is received when one is needed, the insurer generally must pay within 30 calendar days under 10 CCR 2695.7(h). Texas and Washington set their own claim-handling rules, and the page on why settlements stall covers them.

The second clock is the payout. The check has to clear, and every lien needs a final number. Medicare follows a formal process. After it is told about the settlement, its contractor issues a formal demand letter, as CMS describes, and repayment is due within 60 days of receiving the money under 42 CFR 411.24(h). For Medi-Cal, the Department of Health Care Services says no settlement is final until it has had a reasonable time to set its lien. Your undisputed share does not have to wait for an unrelated dispute.

Is my settlement check taxable?

Money received for a physical injury is generally not taxable income, according to IRS Publication 4345. Interest, punitive damages and amounts for medical costs you deducted in earlier years can be taxable. Ask a tax professional about your own situation.

What to do now

1. Ask your lawyer in writing for the date the check arrived and the date it cleared.
2. Ask for a written closing statement that lists the fee, each cost and each lien payoff.
3. Ask which liens are still open, who is negotiating them and what the last offer was.
4. Compare the fee line to your signed agreement. You are entitled to a copy of it.
5. If you have Medicare or Medi-Cal, confirm that the program was told about the settlement.
6. If you disagree with part of the breakdown, say so in writing. Only the disputed part should stay in trust.

Questions about your settlement check?

If your case has settled and you do not know where the money is, or a lien is holding up your share, call Beverly Law at (310) 552-6959. We handle car accident cases in California, Texas and Washington. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. You owe no fees or costs unless we win.

Common questions

Related pages

Car Accident Settlements · Car accident settlements · Why is my settlement taking so long? · Law Blog

Important: This page is general information, not legal advice, and reading it does not create an attorney-client relationship with Beverly Law. Laws change and every case is different; talk to a lawyer about your own situation. Attorney advertising. Prior results do not guarantee a similar outcome. You owe no fees or costs unless we win. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: 2026-11-12.