Should my daughter deposit her settlement into an estate account?

Full question:

My daughter is receiving a $225K settlement, $150K first payment + $75K to come later, from the accidental death of her 6-month old daughter under the care of the babysitter. The payment is coming from the insurance company of the babysitter. I was appointed by the court as the administrator and so I opened a estate account under the daughter's name. But then I was told by our lawyer that the money is going to the lawyer's trust account and they will pay the creditors (about $60K + his fees) before remitting us the rest of the money. Is it still advisable to have the rest of the money deposited into the estate account? Do I need to apply for a probate to disburse the money to our daughter, who is the sole beneficiary? She doesn't want the money to go directly to her because she doesn't handle finances well. The death occured in Nevada as that is where they used to live, but our daughter now lives in Colorado. And although we are currently living outside of the US, our state of residence is Colorado. I just received an email from the lawyer's legal assistant that she is sending us the check so my daughter and I can sign it, then mailed back to them before they can cut us a check. Is this standard procedure- depositing the money in the lawyer's trust account and them paying the bills? At first I was told they will prepare an affidavit for me to sign so they can pay for the medical bills. Is this also standard procedure? Can I pay the creditors myself? I only deal with them through email after the first two initial contacts. Please advise.

• Category: Civil Actions
• Subcategory: Settlements
• Date: 04/07/2025
• State: New York

Answer:

An IOLTA account, or Interest on Lawyers’ Trust Accounts, is used to hold client funds temporarily. The interest earned on these accounts typically goes to support legal services for the public. In your case, the settlement funds will be deposited into the lawyer's trust account. The attorney will then pay any creditors and their fees before issuing the remaining amount to your daughter.

This process is standard. The attorney will handle the distribution of the settlement, including paying medical bills, which may require you to sign an affidavit. You can pay creditors directly if you prefer, but it’s advisable to consult with your attorney before doing so to ensure it aligns with the settlement agreement and legal requirements.

Regarding probate, since your daughter is the sole beneficiary, it may not be necessary to apply for probate to disburse the funds. However, given the complexities of the situation, especially with the move from Nevada to Colorado, it’s best to seek specific legal advice to confirm the best course of action.