Personal injury settlement funds in Ontario are usually paid only after the settlement is documented, required deductions and disbursements are addressed, and the trust-account process is complete. Timing depends on the matter and outstanding steps. This guide explains releases, deductions and practical delays.
Key takeaways: Read the release, confirm deductions and disbursements, ask about liens or other holdbacks and keep a written settlement-funds checklist.
Step 1: Signing the release
Most settlements require the injured person to sign a Full and Final Release. By signing it, the injured person generally agrees not to bring any further claims against the settling parties for the same incident. Releases sometimes contain other terms, such as confidentiality or an agreement to indemnify the defendant against certain claims. Read the release carefully and ask your lawyer to explain any terms you do not understand. Payment is usually not processed until the signed release is returned.
Step 2: The insurer requisitions the payment
Once the insurer receives the signed release and other required documents, the adjuster requests, or requisitions, the settlement payment. Insurers have internal approval and payment processes, and the cheque or transfer is then sent to the injured person’s lawyer.
Step 3: Deposit into the lawyer’s trust account
Settlement funds are normally paid to the lawyer in trust. Ontario lawyers must handle trust funds under applicable Law Society rules, and the funds must be deposited and clear before they can be paid out. Banks may place holds on large cheques, which can delay availability.
Step 4: Deductions and the final statement
Before the balance is paid to the client, the lawyer typically prepares a statement showing the settlement amount and any deductions. Depending on the case and the retainer agreement, deductions may include:
• legal fees, including any contingency fee agreed in the retainer;
• HST on legal fees;
• disbursements, such as expert reports, medical records and court fees;
• repayment of any litigation loan, including interest;
• amounts owed to OHIP under its subrogated claim, which commonly arise in non-motor-vehicle cases;
• other liens or repayment claims, for example by a disability insurer, where applicable.
Ask for the statement in writing and ask questions about any item you do not understand.
Common causes of delay
• The release has not been signed or returned, or has an error.
• The insurer has not yet requisitioned the payment, or the requisition was missed.
• Mail delays, including postal disruptions, or lost cheques.
• The cheque is for the wrong amount or payable to the wrong party.
• There are multiple payors, each with their own processes.
• A foreign insurer is involved, which may add currency or processing issues.
• A self-represented defendant pays personally, and the cheque is returned for insufficient funds.
Settlements for minors and people under disability
Settlements of claims by children or adults under a legal disability generally require court approval under Rule 7.08 of the Rules of Civil Procedure, and the funds may be paid into court or otherwise protected until the child reaches adulthood. This adds time to the process. The position for accident benefits settlements involving minors has recently been the subject of conflicting court decisions.
Beware of scams
Settlement funds can attract fraud. Be cautious about emails or calls asking you to send money, change payment instructions or provide banking details. Confirm any change in payment instructions directly with your lawyer using contact details you already know, not those provided in the message.
Practical tips
• Sign and return the release promptly once you have reviewed it.
• Ask your lawyer for an estimate of the steps and any known delays.
• Do not make large financial commitments until funds have cleared.
• Keep a copy of the release and the final trust statement.
• Consider financial advice for larger settlements, particularly where future care or income needs are involved.
Structured settlements and tax
In some larger cases, particularly those involving serious injuries or minors, part of a settlement may be paid as a structured settlement, meaning periodic payments over time, often through an annuity. Structured settlements must be arranged before the settlement is finalized and require specific steps. Whether a structure is appropriate depends on the injured person’s needs and circumstances. Personal injury damages are generally not taxable in Canada, but the income earned once funds are invested may be. Tax advice may be helpful for larger settlements.
Settlements involving social assistance
People receiving Ontario Disability Support Program or Ontario Works benefits should be aware that a settlement may affect their eligibility, depending on the amount and how it is held. Advice about options, such as how funds are held, may help preserve benefits. The rules should be confirmed before the settlement is finalized.
Conclusion
Personal injury settlement funds in Ontario follow a process that may include releases, deductions and trust-account steps. Contact Booni Law at admin@boonilaw.com or +1 (226) 271-1751 to discuss the next steps. No outcome is promised.
Frequently Asked Questions
How long does it take to receive settlement funds?
It varies. Once the release is signed, the insurer’s process, bank holds and other factors affect timing. No specific timeline can be guaranteed.
Why are funds paid to my lawyer instead of me?
Settlement funds are usually paid to the lawyer in trust so that authorized deductions can be made and the balance paid to the client.
What is deducted from my settlement?
Common deductions include legal fees, HST, disbursements, litigation loan repayments and amounts owed to OHIP or other payors.
Does my child’s settlement need court approval?
Settlements of claims by minors generally require court approval under Rule 7.08. Accident benefits settlements for minors are currently subject to conflicting decisions.
Questions about your settlement?
If your case has settled and you have questions about the release, the payment process or the deductions, Booni Law can explain the steps involved. Email Booni Law at admin@boonilaw.com or call +1 (226) 271-1751. Timing depends on the parties and institutions involved and cannot be guaranteed.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Reading this article does not create a solicitor-client relationship between you and Booni Law. The information in this article may not reflect the most current legal developments and should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances. If you require legal advice, please contact Booni Law.
