When a child gets injured and someone else is responsible, it is up to the child’s parents (or the one with legal custody if they are divorced) to protect the child’s legal rights. Any settlement for a child under 18 is governed by certain statutes. If the gross amount of the settlement, before any attorneys fees and costs is $15,000 or less, the parents have the right as the child’s natural guardians, to settle the case without court supervision.
If the gross amount is more than $15,000 up to $50,000, the Court may appoint a disinterested expert, usually a lawyer who is skilled in settling injury cases, to advise the court about the settlement. And, if the gross amount is above $50,000 the Court must appoint the expert to review the settlement. The experts are called Guardian ad Litems, meaning they are just temporary until the case is over. The guardian may charge a fee for their time and advice to the court.
Why all the fuss about settling a child’s claim? Because years of experience has taught us that some parents are not to be trusted with their child’s settlement money. For example, in some of the bigger cases where a child is a paraplegic or quadriplegic, blinded or clearly going to have major issues with self care, a multi- million dollar settlement has been too tempting for parents to keep their hands off. Because of the past sins of other parents, the Florida legislature and the courts have decided they will not risk the loss of a child’s precious settlement by handing it over to the child’s parents, as loving as they may be.
Courts have come up with ingenious ways to safeguard the settlement. Some of the ways are to put the money into an annuity which starts making payments after the child reaches a certain age, like 18, or starts college, or gets married. This is called a structured settlement. When it is locked away, the IRS permits the earnings in a structured settlement to grow tax free over the years until it is withdrawn. Other ways are to require a court order for every withdrawal from a child’s custodial account. Once the court feels the money is safely locked away, it will approve the terms of the settlement. This is an important milestone. When that happens, the Legal Guardian and the parents are given permission by the Court to sign a release and drop any of the child’s claims in exchange for the agreed upon settlement.
If a seventeen year old child has a case, it might be wise to wait until the child reaches the age of “legal majority” (18 years old), and then a Court does not have to be consulted about the wisdom of the settlement, a guardian does not need to be appointed and the settlement can be turned over to the child after he or she reaches their 18th birthday. Other issues come up: is the child mature enough to use this money wisely? Can the child resist the temptation to spend the settlement on a new car?