How To Handle Your Child’s Personal Injury Settlement

I regularly represent the parents of minor children who have been injured in car crashes. I was in court yesterday on a tragic collision where one teen died and her brother was seriously injured when the SUV driven by their father ran a stop sign, was t-boned, and rolled over. When the mother still had many questions, I thought it would be a good idea to blog about the unique challenges that parents should be aware of.

Let’s say your family was unfortunately involved in a car crash. Obviously a baby cannot talk about what happened. The law also recognizes that children and teens lack the maturity and experience to appreciate the full consequences of their decisions. Until a person is 18, he or she cannot make a legal decision. For these reasons, all states impose special protection on these minor plaintiffs.

How does being under the age of 18 affect the settlement process and the preservation of the damages awarded to your children?

Friendly Lawsuit and Guardian Ad Litem

Normally after his attorney has negotiated an insurance settlement, an adult signs documents, receives a check for his compensation, and signs a release of future claim.

But since contracts signed by minors are void, your children cannot authorize settlement agreements. This would make it impossible to end the case without going to trial and attaining a verdict from a jury. Fortunately the courts remedy this dilemma through what is called the friendly lawsuit process.

Ordinarily the courts are not involved in insurance settlements unless the plaintiff files suit against the policyholder (the driver or owner or both). However a friendly suit allows the parties to appear before a judge for a brief hearing.

The judge appoints an attorney to act as the guardian ad litem (for the duration of the case) to represent each child’s best interests. The attorney reviews your child’s medical records, bills, liens, accident reports and other evidence. He or she meets with or discusses the case on the phone with you and your attorney to gather more information. When I am appointed as the ad litem, I also try to get additional funds from the adverse insurance carrier and reduce medical bills and recovery liens to get the child even more money.

The court holds a prove-up hearing at which the the parents, their attorney, and the guardian tell the judge about the accident and your child’s injuries. The guardian also gives his opinion as to whether the judge should approve or reject the settlement. His fee is paid by the at-fault driver’s insurance company, not by you. Final documents are approved and signed by the judge.

Protecting Your Child’s Funds

The insurance company is not allowed to write a big check to your baby or teen. The courts had the foresight to realize minors are not equipped to make financial decisions. Therefore, a court registry can hold your child’s money until he or she is 18 years old.

However, whether I am acting as the attorney for the parents or as the guardian ad litem, I never feel comfortable giving much money to a young person on his 18th birthday. Most judges don’t either. You have another option.

A structured settlement pays the award in installments after your child reaches his or her 18th birthday. The structured settlement has clear benefits, including a higher overall recovery, tax deferment. and the opportunity to extend the payments over many years. We call it “the college fund.”

If your child was injured in an automobile crash, I will take all steps to protect his or her rights throughout settlement negotiations.

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