- How does a child collect money from the other driver’s insurance company?
- Is the money paid now?
- What can it be used for?
- Do I have to file a lawsuit and go to court?
- Will my child have to testify?
LEGAL PROCESS WHEN A CHILD IS INJURED IN A CAR ACCIDENT
The parents should consult with an experienced personal injury lawyer.
He or she can usually represent all people injured in the collision, including the parents if they were the driver or passenger. One or both of them will represent their child/children as their guardian or “next friend.”
The car accident attorney will attempt to negotiate a favorable settlement, depending on the facts of the case. If this can be accomplished, the adults can settle their claims and and receive their proceeds immediately. If a good settlement cannot be reached, the injury lawyer will file a lawsuit.
However, the child cannot be paid until he or she reaches the age of 18 and is emancipated. Until then, they obviously do not have the legal capacity to make decisions, including hiring an attorney or settling a personal injury claim. Instead, the parents will approve the final settlement or decide to file a lawsuit.
Many times, an attractive settlement can be attained. At that time, the parents’ lawyer files what seems like an oxymoron — a”friendly lawsuit” where the details have been agreed to in advance.
THE ROLE OF THE GUARDIAN AD LITEM
The judge appoints a guardian ad litem to represent the child’s best interests. They investigate the case, meet with the parents, consult with the attorneys involved, and study the medical records and bills. They advise the court whether the offer is fair, all medical bills have been paid or will be paid, and the needs of the child have been carefully considered.
When I am appointed by a judge as the guardian ad litem, I also reduce or further cut down outstanding medical bills and liens to get the child a larger recovery of money.
The parties appear before the judge (by Zoom during the pandemic) at a hearing. The minor child does not need to attend. The court hears the testimony and normally approves the settlement.
This hearing is required or the child could file a lawsuit when he or she attains the age of 18. A record is made showing that the parents and the insurance company understood the legal details to prevent future disputes.
The fee for the guardian ad litem is paid for by the insurance company.
WHAT CAN THE FUNDS FOR A CHILD INJURED IN A CAR ACCIDENT BE USED FOR?
The money cannot be given to the parents before then. The funds are solely for the use and benefit of the child injured in a car accident and as a matter of law, have to be protected for the child’s future. You occasionally hear of stories like one in Utah where several months ago, a man was recently charged with felony theft for stealing his daughter’s substantial settlement.
A court allows the minor child’s funds to be used to pay for things that directly help the child, particularly paying medical bills and liens. If there are future medical expenses, they are the responsibility of the parents until the child turns 18. If the child is still undergoing medical treatment, the case should be postponed until he or she has recovered and the value of the claim can be determined. The parents’ lost wages caring for the child are not reimbursed.
Special educational needs (e.g. an arts program the parents cannot afford for a budding artist) can occasionally be paid from the funds.
Buying a car is rarely allowed unless there is a compelling reason. I am involved in a case now where a 15-year-old really wants to start driving when he turns 16. I have explained to the mother that unless that is the only way he can get to school, this will not be approved by a judge.
HOW IS THE MONEY INVESTED ?
There are two choices for how the money is distributed.
A. Annuity: This is a guaranteed insurance contract that will be used when the amount of the settlement is higher.
There are different plans that can pay money on different payout schedules. Most courts like to see a “college plan” where money is divided between ages 18 – 22 in annual, semi-annual, or monthly payments. Other schedules can be chosen by the parents.
This is preferable to giving a large sum of money to the just turned 18-year-old who can plunk the money down on a new car or take a vacation. The advantages to an annuity is that the funds are protected and offer favorable interest rates and tax benefits.
B. Registry of the court: (the bank account administered by the county).However if the child’s settlement is relatively small, usually less than $10,000, payment can often be made up front.
That is because most annuity companies cannot fund such a small amount of money due to start-up costs. The insurance company writes a check to the county clerk and the money is deposited into the “registry of the court.”
The fund accrues interest and when the child reaches the age of 18, they can go to the county administration building and with be paid in full.
C. Disability payments: if the car wreck is very serious and the child is disabled, consideration must be given to whether Social Security disability benefits can be paid. If so, a special needs trust may be needed.
IF YOU HAVE QUESTIONS
My law firm can answer your questions and help you through what can be a complicated process. We only handle car and truck wreck cases. There are far too many of them in Texas. One just happened this morning here and four children are reported injured.
There is never a charge for the first consultation and all legal services and costs are free unless and until you recover money.
Please contact our office at 1-885-801-8585 or click here.