The goal of any lawsuit is to recover money for a victim's losses. Whether a case ends through a negotiated settlement or jury award, that money doesn't immediately go into your bank account. This leaves many asking: "How do I receive compensation after winning a truck accident case?"

Answer: When a truck accident victim wins their case, the trucking company or their insurer will write a check that is deposited into what is called an IOLTA, from which the client, their attorneys, and any outstanding bills and expenses are paid.

In this article, we'll discuss how a judgement or jury award goes from a number on paper to cash that you can actually spend. Since you likely haven't heard of an "IOLTA," let's start there.

What is an IOLTA?

An IOLTA, or Interest on Lawyers Trust Account, is a type of short-term account used to hold client funds temporarily after winning a lawsuit. It's put there to help ensure the client's money will be ethically handled and won't mix with their attorney's personal or business accounts.

So why hold it in the account at all? Why not just divvy up the client and attorney portions of the settlement right away? Because more often than not, those aren't the only two parties with a claim on those funds. The IOLTA also serves as a temporary fund to pay any outstanding expenses related to the case. Those might include—but aren't necessarily limited to—medical liens or bills, unpaid child support, and legal fees or costs to be repaid.

Basically, nobody expecting a portion of a settlement wants their share to get tangled up with anyone else's. Think about it like this: If you have a clear idea about what to do with your award (paying off your house, getting a replacement car, starting a college fund, etc) and then a hospital barges in and says part of what's yours is actually theirs, that could kick off a whole new legal dispute and throw a wrench in your plans. It's better for everyone with a claim to have the money in a separate, neutral place until all lingering debts are squared away, after which no one squabbles about who gets what.

IOLTA is Not a Free-for-All

In case the above description sounds like anyone can just reach in and scoop out their portion of a settlement at will, let me be clear: The client must consent to disbursements to other concerned parties. If they think the amount in question is unfair or incorrect, they can dispute it, and that dispute will generally be resolved through negotiation or court order. However, it should also be noted that denying claims in an effort keep the whole settlement probably won't go well.

So do you have to wait forever until everybody else gets what they ask for? Not necessarily. Some funds may have to be held back to satisfy liens or claims, but an attorney is expected to promptly disburse any undisputed portion of the IOLTA to the client. That means whatever part of the settlement has no other claimants is fast-tracked to you.

IOLTA Interest Goes to Charity

There is a common misconception that attorneys want to keep a settlement in an IOLTA as long as possible to collect interest. In reality, the interest in an IOLTA goes to charity or to Legal Aid organizations that help people who cannot afford attorneys. The attorney or their firm do not receive any of the interest the account generates.

That's another reason law firms use IOLTA in the first place is to avoid the appearance that they're trying to improperly collect interest on a client's settlement or jury award.

Are There Other Steps to Collecting a Settlement?

It was important to clarify what an IOLTA is and how it works, but it's not the first or the last step involved in collecting compensation from a lawsuit. So what else is needed?

Assuming the victim wins either negotiations or a court judgment, they'll need that victory and its terms in writing—not usually a big ask of legal proceedings, but an important thing to verify all the same. Having proper documentation means nobody can suddenly change the terms or renege on what they agreed to, and the law doesn't deal in "gentlemen's agreements" or firm handshakes to seal a deal.

Then, the trucking company or insurance carrier will require the victim to sign a release. This document comes before any payment, and it basically says the victim won't sue them again for the same incident—even if their injuries get worse or they change their mind about the compensation.

When the settlement is placed in the IOLTA, the client will sign one or more disbursement agreements provided by their attorney. That paperwork is necessary to keep track of exactly how much of the settlement every concerned party walks away with. Clear, tangible records mean everything is above board and all agreements can be referenced if needed.

Finally, the client may sign a statement of acknowledgment. Some defendants and insurers require this in addition to the release. The signed statement shows that the victim understands their case is closed and no further action will be taken. Sometimes one lawsuit is just the first domino of many to fall, though, and at that point the statement likely wouldn't be signed until every related case is brought to a close.

Annuities

Truck accident settlements are often structured into annuities rather than paid out as lump sums, especially when the compensation is substantial or the injured party has long-term care needs. In a structured settlement, the insurance company or liable party arranges for periodic payments through a third party. These payments can be scheduled for a set number of years or even for the recipient’s lifetime, depending on the terms of the agreement.

Annuities have some advantages over a single bulk payment. For example, they provide a reliable stream of income over a period of time. That can be especially helpful for people recovering from serious injuries, since it provides some long-term stability and assistance when the victim can't necessarily earn income through a job. Regular payments also help ensure that ongoing medical expenses, therapy, and living costs are covered without the risk of prematurely exhausting the funds.

Additionally, many structured settlements are tax-advantaged, meaning the payments are often not subject to income tax. For someone who may not have experience managing large sums of money or who faces long-term disability, an annuity structure can reduce financial pressure and offer some peace of mind.

Is a Settlement Taxed?

Generally speaking, any money from the settlement is not taxed as income. A properly structured settlement or jury award compensates someone for their losses, and those losses aren't treated as income. With that being said, there are instances where a poorly structured settlement could expose someone to unnecessary taxes.

We just spoke about annuities a moment ago; as a general rule, if the defendant (i.e. the person who hurt you) purchases an annuity on your behalf, that is considered payment for your losses, and therefore is not taxed. On the other hand, if you get a check for your losses and go purchase an annuity yourself, that may be treated as taxable income.

To recap: While your settlement probably won't be taxed, it's important that your attorney structure it correctly to avoid unnecessary taxes.

What if a Child or Disabled Adult is the Client?

Adults of sound mind are not the only group who find themselves in the plaintiff's chair of truck accident lawsuits. Children and dependent adults—people whom the law generally considers incapable of making financial decisions—often need help with settlement procedures. In those cases, the court appoints a special attorney called a guardian ad litem, a Latin phrase meaning "for the suit."

The ad litem makes sure that nobody involved with the suit in any way—attorneys, the insurance carrier, relatives of the victim, or anyone else—does anything that isn't in the client's interests. In short, the ad litem plays referee who people who can't look after their own interests.

In cases that involve a mix of adult claimants and dependents that require an ad litem, distributing money from the settlement can be delayed until a court is satisfied that the settlement is in the interests of the dependents.

Grossman Law is Here to Help

As you can see, obtaining a settlement or jury award isn't quite the finish line in a case. It's not because your attorney wants to drag out the process, but because there are still post-settlement steps needed to protect the client's interests. It wouldn't do a client any good to resolve their case and find themselves sued by the hospital that treated them. While people naturally feel some frustration with more steps after the case is won, this process developed over the years to protect everyone's interests and ensure that everyone can confidently move on from the case.

The attorneys at Grossman Law Offices have decades of experience pursuing maximum settlements and ensuring clients get every penny coming to them. If you were hurt or a lost a loved one in a commercial truck accident and you don't know what to do next, contact Grossman Law Offices for a free and confidential consultation. Our attorneys are available 24/7.