Every year, thousands of children are seriously injured as a result of negligent conduct of others.  From unsafe conditions in homes to negligent driving, children can be especially vulnerable to injuries. Like adults, children are entitled to proper compensation for the full extent of their injuries. But unlike adults, children are not able to submit insurance claims or file lawsuits on their own.  The legal system has developed some important safeguards so that the claims process and courts work just as well when minors are accident victims.

Here are answers to some important questions:

Why Does a Judge Need to Approve a Minor’s Settlement of a Personal Injury Claim?

Minors are not legally competent to sign enforceable contracts, such as settlement agreements and releases.  As such, in order to make such resolutions enforceable, insurance companies require that courts approve the settlements for $10,000.00 or more.  This is essentially an added layer of protection for the insurance companies, who want to make sure the claims are over once and for all and cannot be brought again once the child turns 18.  It also adds protection for the minor, so that there is a reasonably safe plan in place for the custody of the minor’s settlement proceeds. Lastly, having a court approve a settlement protects the parents, since they are not the only ones making the decision. They acknowledge that they are holding the settlement proceeds for the benefit of the minor, and are entrusted to safeguard the funds.

What Happens at the Hearing?

At the hearing on a petition to approve a settlement of a minor, the judge will review the facts of the case and the settlement amount to be sure it is an appropriate resolution.  The judge will also make sure that a reasonable plan exists for the proceeds to be held or invested for the benefit of the minor child.  If a parent is present and part of the hearing, the parent must agree that the settlement proceeds belong to the child and are to be used for the benefit of the child.  If there is not a parent, the Court may appoint a guardian to oversee the investment of the proceeds and to ensure that the best interest of the child is protected. For substantial settlement amounts, a structured settlement is often used.

What Is a Structured Settlement?

A structured settlement is a legal settlement that is paid out as an annuity instead of a lump sum following the resolution of a personal injury claim. This often occurs when a minor claimant is involved. The insurance company deposits a certain amount into a fund, and the proceeds are spread out over time on pre-determined dates and amounts with a guaranteed return.  The “structured” part just means that not all of the proceeds will be paid at one time.  These are flexible instruments that can be tailored to meet the minor’s needs. There are many companies that specialize in crafting structured settlement agreements and investing the funds to produce guaranteed tax-free returns for the accident victim.  In many cases where the victim’s injuries are permanent and may require a lifetime of special care, having a steady flow of income is the best option to address future needs.

For more information on personal injury lawsuits for minor children, contact Brooks and Crowley.

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