My Trust Account and Your Money

Assuming everything goes the way we want, at the end of your injury case you should have some money coming to you. But where does that many come from, where does it go, and who’s responsible for what?

First, in most injury claims, the money you get either by settlement or court award is paid out by an insurance carrier. Generally, it’s paid in a check, payable to BOTH you as the victim and me as your attorney. This two party check MUST, by law, then go into your attorney’s Trust Account.

As an attorney, I’m required to put any client funds I receive into a separate special account called my Trust Account. Lawyer Trust Accounts are HIGHLY regulated and monitored and we’re required to keep strict records about what goes in and what goes out. While these requirements are somewhat onerous for attorneys, they are designed to give clients peace of mind that their money is safe in our hands. For the most part, these rules and regulations work; most attorneys are very reliable about keeping a strict accounting of client funds and making sure they go where they’re supposed to. I know I am!

As stated, since the check has my name on it (and for other reasons explained below) I will place your settlement funds in my Trust Account. I have to give those funds sufficient time to clear before I disburse them. “What?!,” you exclaim. “It’s the 21st century! How can we still have to wait to see if a check is good or not!?” I hear you. That’s a valid question that’s best directed to your bank. Suffice it to say that the law requires me to hold the funds for a week minimum to make sure they clear, so I can’t play games with that timeframe. You should note that I have, on at least three occasions, had insurance companies bounce checks on me, so this waiting period is for everyone’s benefit.

Now we know where the funds come from, where they take a brief vacation at and why. So let’s figure out where they go…

Generally, on an injury claim my fee comes out of those funds. It’s normally 1/3 of the total amount, but that can vary under some special circumstances. After my fee, we sometimes have to pay certain medical expenses to health care providers. That might be voluntary – meaning you, the client, asked me to pay that bill – or it might be mandatory – meaning that there’s a law telling me I HAVE to pay a certain bill. You’ll know that before it happens, so don’t stress too much about those details for right now. On rare occasions we might have to repay my office for money it advanced on your case, but that’s not always the case. Finally, after all of that, the remainder (normally the vast bulk) of the funds goes to you.

All of this will be documented in a ledger that will show you what went in, what went out, when, and to whom. We’re required to keep those ledgers for all funds that come into and go out of the Trust Account so you should always get a copy of that document when you have funds coming through my practice.

I hope that helps to clarify the mystery of settlement funds and Trust Accounts. As always, call me (or your own attorney) for questions. 919-929-2992.

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Jeffrey Allen Howard, Attorney at Law, PLLC
1829 E. Franklin St. - Bldg 600
Chapel Hill, NC 27514

(P) 919-929-2992
(F) 919-636-4779

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