How Are Alberta Personal Injury Settlements Paid Out?
There’s a sense of elation when you’ve finally been granted a personal injury award or accept a settlement after a long negotiation process. At long last the end is in sight. Your bills will get paid, your expenses will be handled, and your needs will be met. You can be done with the courts and the process.
Now you just have to navigate the final few steps: getting the settlement and handling it properly. Here’s what you need to know.
What is the settlement check timeline?
Assuming your case is like 92% of cases your personal injury matter will be decided out of court. That means once both parties sign the settlement agreement the case is done: there won’t be any appeals or changes. The settlement agreement will usually outline how much time the insurance company has to pay the check.
It usually takes about six weeks for the money to wind up in your account, though it tends to take less time for insurance companies to cut the check. That’s because the first check doesn’t go to you: it goes to your lawyer.
Your lawyers pay themselves their percentage first, along with any other legal expenses such as covering the fees for hiring expert witnesses.
Don’t worry. Most plaintiffs find that settlements are structured in a way to make sure that they are taken care of even after lawyers fees are paid. In part this is what makes the pain and suffering award so useful: it helps you pay medical bills and expenses while ensuring your lawyer gets paid, too.
They then pay out anyone who has a claim on the money. Long before the settlement is done medical establishments in particular have usually contacted the lawyer to let them know they have a claim. The lawyer has usually acknowledged this claim in writing.
This is a good thing: it keeps them from harassing you with collection agencies or even suing you for large medical bills that you can’t pay yourself. Either way, they’re the next person the lawyer pays. This also means you don’t have to track these entities down and pay them.
You then receive the remainder, often as a direct wire to your account, sometimes as a physical, paper check.
For some individuals this check will be a significant sum. This is usually the case when loss of earning capacity awards have been added to your settlement, as that’s meant to help you live in the future. It may also be the case when expenses for future medical care have been added into your settlement. It’s important to know what the settlement is for and what it represents so that you can handle it and spend it appropriately. It’s yours to keep and spend however you like, but if it was meant to provide you with an income for the rest of your life and you use it up in the first year you might have significant problems later on, with no particular recourse for solving them.
These amounts almost never represent some big windfall that make plaintiffs “rich,” and even if they did it would come at such an incredibly high price that few people would want to pay it if they truly understood what they’d have to live through to get that money. The point of a personal injury settlement is, to the best of money’s ability, to make you “whole” again, which means that it’s meant to help you keep the means you have more than it’s meant to change your fortunes.
If your case went into litigation you might not get your money right away. The insurance company may choose to appeal, which can lengthen the process and change the amount of funds you’re ultimately entitled to. This is yet another reason why most lawyers will tell you it’s wiser to settle most personal injury cases out of court.
What is the difference between a lump sum and a structured settlement?
A lump sum is a single big check written out to you or deposited into your account. You then decide what to do with all the money all at once. Usually investing that money is the wisest course, though this has tax implications.
A structured settlement pays you a certain amount every single month. You don’t have to worry about investing the money, and you don’t have to worry that you might mismanage it. If you’re meant to live on this money the rest of your life this is usually the right choice. It’s also usually the simplest choice.
How do advances on personal injury settlements work?
Services do exist which give you advances on your personal injury settlement, but be careful. These are loans that must be paid back.
If your settlement isn’t as high as you’re anticipating or if the deal falls apart entirely you could end up in a great deal of financial trouble. In addition, the loan company becomes just another claimant who gets paid before you do.
Can an Alberta personal injury settlement be taxed?
Not directly. Your personal injury settlement isn’t counted as income and isn’t taxed as such.
However, if you earn any interest on that money then the interest would be taxed through Canada’s capital gains tax. This isn’t as scary as it sounds: a percentage on half the earnings, not half the total amount. Still, it does mean some of your money will wind up going to the government.
In addition, if you use your settlement to buy an income-bearing asset such as a rental property then you can be taxed on those incomes.
Why call us?
Each of our lawyers has over two decades of experience handling personal injury cases in Calgary, Alberta. Our team is known for our courtroom litigation skills as well as our sharp negotiation skills. We know personal injury cases inside and out, and we know how to handle insurance companies while protecting your rights.
We’re known for being kind, responsive, and easy to deal with. We keep you in the loop, answer all of your questions and concerns, and do everything we can to make the process run as smoothly as possible. We’ll even handle the insurance companies on your behalf!
Don’t try to handle your case alone. Your call is risk-free. Call (403) 225-7777 to set up a consultation today.