While a minor may be involved in a personal injury settlement, it’s not handled traditionally. Instead, special rules under State Legislature apply.
It’s not hard to see how there may be concerns about a settlement agreement including a minor child. Therefore, the minor’s compromise can afford some level of protection.
Family members, attorneys, and others may wish to take advantage of the child’s settlement funds.
A court may nominate a guardian ad litem or conservator in the matter if no custodial parent or trusted guardian is available.
Additionally, you may find that the court reduces applicable attorney fees. There may also be a court order to have a bank trust set up until the minor reaches majority age.
Note that an elder or incompetent person in California is entitled to a similar process.
A child has a right to whatever personal injury settlements may have been granted via court approval or otherwise.
This may include compensation for emotional damage, medical bills, or wrongful death (in a case where the claimant is a minor.).
While the child should be able to receive this regardless of age, there must be a baseline of understanding of expectations following the personal injury lawsuit.
So, how does one simply answer the question “what is a minor’s compromise?” It’s a process guided by state law that protects the child while ensuring that all involved understand the stipulations.
Only the custodial parent or legal guardian i.e., the one who lives with the child can sign a minor’s compromise to guarantee receipt of payment.
In the absence of any such party, the court may nominate a guardian ad litem or conservator for the minor’s compromise.
Any of these parties may petition the court to transfer the personal injury settlement agreement funds to:
In the absence of a guardian when a court wishes to approve compromise, it can take one of several alternative steps such as:
Personal injury attorneys are hired as they typically would be for injury matters. Provided that a settlement agreement is reached and approved in the minor’s claim, the funds are then sent to the blocked account or whatever other holding method is deemed fit.
Note that an expedited petition for a minor’s compromise may be filed if needed.
Both the personal injury lawyer in the matter and the petitioner for the transfer typically have 30m days to demonstrate to the court that the funds have been received and deposited as expected. At this point, the personal injury settlement is considered complete.
Note that these settlements are final, which means there’s no reopening of the case thereafter. For example, the money awarded may not have been enough to cover the extent of the damage. Even in such a situation, no exception is made.
This is why personal injury attorneys are important just before you get to this stage of the process. You typically can’t complete a case settlement unless the extent of value, harm, and recovery is properly understood. Lean on the expertise of your attorney as much as possible.
Apart from going over the settlement agreement and negotiating its terms effectively, your lawyer will also account for getting the best possible net recovery.
Additionally, if the case is subject to litigation, the lawyer will also help to protect you from unwarranted delays or sanctions in the minor’s compromise.
Earlier, you got a brief overview of where settlement proceeds could go following a minor’s compromise. Here’s a bit more of an in-depth look at the alternatives:
Minor’s settlement trust – This trust is going to require ongoing court supervision. Typically it’s the go-to option for settlements that are a bit larger or those that may come with annuity payments while the minor is under 18. By law, the minor must be able to revoke it upon reaching legal age. The flexibility this option offers is its true appeal.
County treasurer transfer – Under the Probate Code, there is a system that allows for a court order that causes the settlement proceeds to be transferred to a county treasurer maintained account. It bears many similarities to a blocked account but is managed by a government representative. While it’s available, this option is rarely used.
Distribution to parent as trustee – In cases where the settlement totals less than $5,000, no oversight or bond is needed to pay the money to the parent. However, it must be held in trust until the minor reaches legal age.
Distribution to special needs trust – A special needs trust should be considered if the child has a disability, though not every child with one will need to have such a trust set up.
The advantage here is to children with disabilities that will prevent them to work during adult life. Holding the assets in such a trust can maintain eligibility for public benefits that may come with certain resource limitations.
Blocked account – This is the standard form of the county treasurer option, and it is the preferred way of going about these cases. Put simply, the funds are placed into an account that is only accessible by the minor upon becoming 18 years old. It’s easy to set up and administer and the child receives the money outright when the time comes.
Judicial council forms mark the start of the process. The court signs the form to have the money deposited into this kind of account (MC-355). The financial institution then signs a corresponding form acknowledging the order. A parent can be completed ex parte by a parent who submits a withdrawal request, which may be granted as an order from the court.
Unfortunately, these situations don’t always end with a selection of something right for the child.
For example, if there’s a big settlement and none of it is needed during minor years, then consider a blocked account.
A disabled child who will have problems securing gainful employment because of said disability is better suited to a special needs trust.
It may also help to talk to your lawyer to get a recommendation based on your situation.
A personal injury claim is just as important to a minor as it is to an adult. At Ehline Law, we are familiar with all elements of these cases including minor’s compromise stipulations, filing fee requirements, the code of civil procedure, and more.
Additionally, we represent clients across a plethora of personal injury matters such as slips and falls, car accidents, truck accidents, and more!
Call (833) LETS-SUE today for a free consultation!
Here are some additional answers to frequently asked questions: