Our Tacoma Staff Helps Our Clients with Lawsuit Settlement Agreements
By Kelsey Frey and Alicia David
Congratulations! You’ve just settled your case. Now what? First, one of the two following things will happen:
1) The insurance company will send both the settlement check and release of all claims; or
2) The insurance company will send the release first, wait until they receive the signed release back, then send out the settlement check.
Someone from our office will call and let you know that the release and check are in, and will make arrangements with you to sign.
When you are signing the check and release, we will also have you sign a W-9 form. The W-9 form is for the Internal Revenue Service (IRS) because the interest you earn while your settlement money is held in trust is considered taxable income.
Also, if a portion of your settlement was allocated for wage loss, that portion is also taxable income.
It’s Important to Understand the Process Before Funds are Released
Once you’ve signed the release, check, and W-9, the check will be deposited into a trust account at our bank. The funds must remain in the trust account for at least 10 business days until the money has cleared.
Rule of Professional Conduct (RPC) 1.15A(h)(7) states, “a lawyer must not disburse funds from a trust account until deposits have cleared the banking process and been collected…”
The 10-business-day time period is the time frame recommended by the Washington State Bar Association and that is the procedure that our office follows.
While we are waiting to disburse funds to you, we will call your treating providers to find out if there are balances owing.
If you have PIP or health insurance, we will also find out what they have paid toward your treatment and confirm how much should be reimbursed.
Once the ten business days are up, we will call you to set up a time for you to come in and sign the settlement statement and pick up a check for your portion of the settlement. Checks will be cut from your settlement to medical facilities and health or PIP insurance to pay off balances owed for injury-related treatment.