Short Answer

The portion assigned to a structured settlement annuity usually is not paid to the injured person, beneficiary, guardian, or law firm as an ordinary settlement check. Instead, the defendant or insurer sends that amount to the entity responsible for funding the annuity, while any approved cash portion, expenses, or other distributions are handled separately. The settlement documents, funding instructions, and any required North Carolina court order must all match before funds are released.

How the Settlement Check Changes When an Annuity Is Used

In a traditional personal injury settlement, an insurer may issue a settlement check payable to the claimant and the claimant’s law firm. The funds are deposited into a trust account, allowed to clear, and then distributed after approved fees, expenses, liens, and other obligations are addressed.

A structured settlement works differently. The parties agree that some or all of the settlement will fund future payments. Rather than giving the claimant unrestricted control over that portion, the defendant or insurer generally transfers it to an assignment company or other designated funding entity. That entity purchases an annuity from a life insurance company, which makes payments according to the agreed schedule.

The structured portion may provide periodic payments, payments beginning at a particular age, scheduled lump sums, or a combination of these arrangements. Once the annuity is funded, the beneficiary ordinarily receives the payments described in the contract rather than a check for the annuity’s purchase cost.

There May Be More Than One Settlement Payment

Using an annuity does not necessarily mean that no settlement checks will be issued. The settlement may be divided into several parts:

• Annuity funding: Sent directly to the assignment company or annuity funding entity.
• Immediate cash distribution: Paid as directed by the settlement agreement and any court order.
• Attorney fees and case expenses: Handled according to the fee agreement and approved settlement terms.
• Medical liens or other valid claims: Resolved before final distribution when applicable.
• Wrongful death expenses: Approved funeral, burial, or other permitted expenses may be addressed before the remaining proceeds are distributed.

The exact payees depend on the settlement documents, the type of claim, court requirements, and whether a minor or an adult lacking legal capacity will receive any part of the recovery.

Why the Structure Should Be Finalized Before a Check Is Issued

The parties should settle the annuity terms before the claimant receives or controls the money intended for the structure. If an ordinary settlement check has already been delivered, endorsed, or deposited, using those funds to buy an annuity later may not create the same legal or tax arrangement as a properly established structured settlement.

For that reason, the parties usually prepare the payment schedule, annuity quote, assignment documents, release, and funding instructions before the insurer sends the money. The defendant or insurer must also agree to the structure. A claimant generally cannot require the other side to change an agreed lump-sum payment into a structured settlement after the settlement has been completed.

Tax treatment can depend on how the transaction is documented and funded. A lawyer cannot provide a binding tax conclusion merely by reviewing the settlement check, so appropriate legal, financial, and tax review should occur before the structure becomes final.

What If a Minor Is Receiving the Settlement?

A parent’s involvement does not automatically authorize the parent to receive and control a child’s settlement money. Depending on the case, a guardian ad litem may protect the child’s interests during the claim, while a guardian of the estate may be responsible for property belonging to the child. These roles are not always interchangeable.

North Carolina law recognizes several court-supervised methods for handling funds owed to minors. N.C. Gen. Stat. § 35A-1227 identifies options that may include administration by a guardian or clerk, depending on the source and circumstances of the funds.

When a structured annuity is proposed for a minor, the court may review matters such as:

• The annuity issuer and the entity responsible for making the payments.
• The amount used to fund the annuity and the present value of the future payments.
• The dates, amounts, and duration of the scheduled payments.
• Whether any payments continue to a named beneficiary if the child dies before receiving all guaranteed payments.
• How any immediate cash portion will be held or administered.
• Whether the overall arrangement protects the child’s interests.

The final court order should identify the approved distribution and payment schedule clearly. The insurer’s checks and annuity documents should then follow that order.

Wrongful Death Proceeds and Funeral Expenses

A North Carolina wrongful death settlement is handled by the estate’s personal representative, but the net proceeds generally pass to the people identified under North Carolina’s intestate succession rules rather than being distributed under the decedent’s will. N.C. Gen. Stat. § 28A-18-2 also recognizes reasonable funeral expenses as a wrongful death damages category and governs how recovered proceeds are handled.

Accordingly, funeral invoices submitted by an estate administrator can affect the amount remaining for beneficiaries. Before annuity funding is finalized, the parties may need to confirm:

• What funeral or burial services were charged.
• Who paid or remains responsible for each charge.
• Whether the documentation supports the requested amount.
• How the expense is treated in the proposed settlement distribution.
• Whether the court must approve the expense or final allocation.

The existence of an invoice does not mean an administrator may simply subtract any requested amount. The expense should be documented and handled under the governing law, settlement terms, and court order.

How This Applies When an Administrator and Guardian Are Involved

When a deceased person’s parent serves as estate administrator and another adult is expected to serve as guardian for a minor beneficiary, the settlement paperwork must distinguish those roles. The administrator has authority connected to the wrongful death claim and estate administration. The guardian’s authority over a child’s property depends on the type of guardianship and the clerk’s appointment documents.

Before money is sent, the parties should confirm the administrator’s letters of appointment, the guardian’s qualification, the child’s share, the approved funeral expenses, and the amount allocated to the annuity. The structured portion should then be paid directly through the agreed funding process. Any remaining cash should be paid only to the person or account authorized by the court order.

An annuity can reduce the amount of cash requiring immediate administration, but it does not eliminate the need for correct appointments, court approval, or accurate distribution records.

Documents to Review Before Funding the Annuity

• The signed settlement agreement and release.
• The annuity quote and complete payment schedule.
• Qualified assignment and funding documents, if used.
• The name and financial information of the annuity issuer.
• The proposed or entered court approval order.
• The estate administrator’s letters of appointment.
• Guardian, guardian ad litem, or clerk appointment records.
• Funeral invoices, receipts, and proof identifying who paid them.
• Medical lien, benefit reimbursement, and other claim notices.
• A written settlement statement showing each proposed payment.

Names, dates, payment amounts, and payee designations should be checked carefully across every document. A mismatch can delay funding or create questions about who is legally entitled to receive future payments.

Can the Beneficiary Later Convert the Payments to Cash?

A beneficiary ordinarily cannot demand the annuity’s purchase cost after the structure has been funded. The annuity issuer must follow the payment schedule in the contract.

North Carolina also regulates later attempts to sell or transfer structured settlement payment rights. Under N.C. Gen. Stat. § 1-543.12, a transfer generally requires advance court authorization and findings that include whether the proposed transaction is in the payee’s best interest. A future transfer is therefore different from changing the settlement before the annuity is purchased.

When Wallace Pierce Law May Be Able to Help

Wallace Pierce Law may be able to review whether the proposed payment instructions match the settlement agreement, annuity documents, guardianship records, and court order. In a wrongful death matter, that review may also include confirming the estate administrator’s authority, documenting funeral expenses, identifying the proper beneficiaries, and preparing a clear distribution statement.

The firm may also help coordinate with the insurer, annuity representatives, estate participants, and guardian so that the structured portion is not mistakenly issued as an unrestricted settlement check. Whether a structure is appropriate depends on the beneficiary’s circumstances, the proposed payment schedule, and the approvals required in the particular case.

Talk to a Personal Injury Attorney in Durham

If your question involves injuries, insurance, fault, medical documentation, settlement paperwork, or a possible deadline, speaking with a licensed North Carolina attorney can help clarify your options. Call 919-313-2737 to discuss what happened and what steps may make sense next.

Disclaimer: This article provides general information about North Carolina personal injury law based on the single question stated above. It is not legal advice and does not create an attorney-client relationship. It is not medical advice, tax advice, or insurance policy interpretation. Laws, procedures, and local practice can change and may vary by county. If there may be a deadline, act promptly and speak with a licensed North Carolina attorney.