Your child did nothing wrong. One day your son was walking on a sidewalk. The driver of a car drove onto the sidewalk striking your child and causing a broken leg and concussion. Your first concern is your child’s well being, but once your son is discharged, paying the medical bills and covering your expenses while you are home caring for him are real issues. Fortunately, you found a good attorney and have received a settlement offer from the driver’s insurance company. But now you learn that a judge has to approve the settlement and has the right to say “no” on behalf of your son. Why is this procedure necessary?
Many states require court approval for minor child settlements. Sometimes a court may appoint a guardian or conservator for the child, to look after their best interests. This procedure was put in place to ensure the settlement itself and the proceeds are used in the best interest of the child. Unfortunately, some injuries require long term care or future surgery. The court will make certain the money obtained in the settlement is properly set aside and independently managed, so the money is there when the need arises. This does not mean that any claim the parents may have for their own damages is extinguished. Rather, it just means that there is always some potential for a conflict of interest between a parent and their child’s claims, and the court makes inquiry into the terms of the settlement and the future payout, to make certain the child’s needs are met.
Sometimes ensuring a child’s future needs are met involves the use of a structure settlement. Instead of receiving all the money at age 18, a structured settlement can provide an annuity with lump sum payouts in the future, for medical care, education, or even potentially a home purchase. By utilizing a structured settlement and a trustee, the court may have greater confidence not only that the money will be there when it’s needed, but also that it will only be used for the stated purpose. Because the money is not paid upfront, structured settlements may also be an attractive tool for an insurance company.
While minor child settlement proceedings and structured settlements may seem confusing and scary to parents, they are meant to be used to help care for the injured child, both today and in the future—an interest any parent would agree is vitally important.