Escrow funding of structured settlements has been the general practice in Canada for decades, and a recent Ontario Superior Court decision has confirmed its continued importance.

In Spicer v Wawanesa Mutual Insurance Company, 2023 ONSC 3221, Regional Senior Justice Firestone adjudicated on a Rule 7 application for Court approval of a statutory accident benefit settlement brought by Bogoroch & Associates LLP on behalf of an adult under disability.  RSJ Firestone provided clarity regarding escrow funding in the context of the Rule 7 approval process. In paragraph 27, he states, "The placing of a structure as a precondition to court approval does not violate Rules 7.08 and 7.09. To the contrary, by doing so counsel is doing exactly what is required for the court to properly consider the proposed structure."

Advance funding a structure allows a precise payment schedule to be secured with certainty and the issuing life insurer(s) to be identified. Even though the structure is funded, no payments are made to the plaintiff and no contract is issued until the settlement is approved by the Court. The structure can be amended if required by the Court prior to approval. If the quantum of the settlement itself is not ultimately approved, the life insurer(s) that received the structure funds will return the structure funding to the funding entity, without penalty or interest.

The steps for escrow funding are as follows:

• The final option and amount are confirmed,
• The broker requests the structure funds,
• When funding is received, final brokerage is completed,
• Funds are placed with the issuing life insurer(s) that offers the highest payment,
• The Final Printout and name(s) of the issuing life insurer(s) are provided,
• A structure-compliant Release or Judgment is finalized, and then;
• The life insurer(s) are notified and payments commence as scheduled.

This may sound complicated, but McKellar makes this process simple and easy. Contact us for more information.