Injury Lawsuits Involving Minors: What You Need to Know
If a member of your family is injured due to the negligence of another, but is unable to handle his/her own claim, what can you do as a loved one? As is often the case in the law, the answer is ‘it depends’. The first question we ask is ‘who is the person who needs help’?
Lawsuit on Behalf of a Minor
If the injured individual is a minor (Georgia law defines a minor as anyone under the age of 18), the child’s personal injury claim is “split” between the parent and the child. Any medical expenses the child incurred for medical treatments are vested with the parents. However, the child’s pain and suffering claim is held by the child. If the case is unable to be settled pre-suit and a lawsuit must be filed with the court, both the parent and the child must be named plaintiffs. This is an important detail. The failure to name both parent and child means there will not be full compensation for the child’s injuries and damages.
Generally speaking, the parent may assert the child’s claim simply by being the child’s parent. There is nothing “extra” which needs to be done. There is complexity, however, when it comes to settling the claim. Let’s look at three different types of settlements / payout situations.
Settlements Under $15,000
Georgia law is strict when it comes to allowing a parent to settle a minor’s claim. If the “gross settlement” (i.e., amount paid by the insurance company) is $15,000 or less, the parent may compromise the claim without becoming the conservator of the minor and without court approval. In short, settlements under $15,000 require nothing more than the insurance company issuing the check to the minor’s parent and the parent signing the release prepared by the insurance company.
Settlements Over $15,000
When the gross settlement is in excess of $15,000, the settlement requires court approval. And reaching a settlement requires approval by a judge. There are a few different criteria that will determine the judge and jurisdiction.
- If suit was filed, the judge where suit was filed is the judge who must approve the minor’s settlement.
- If no suit is filed, then the parties must seek the approval from the probate judge in the county where the minor resides.
- In either case, if the judge rejects the parties’ settlement as unfair to the minor, the parties must re-negotiate.
In certain scenarios, an alliance will develop between the insurance company and the minor’s parent as they work together to convince a judge the settlement is fair. But ultimately, the case cannot be settled unless a judge approves it.
Settlements Over $15,000 with Parents as Conservators
When it comes to lawsuits involving minors, the most complex settlements are those that fit the following scenario:
- The gross (total) settlement is in excess of $15,000
- As part of the settlement terms, over $15,000 will be paid out to the minor’s parents before the minor reaches the age of 18.
In the above situation, not only must the settlement be approved by a court, but the parent(s) must also be named conservator of the minor by a probate court. This process can be slow, cumbersome, and expensive. Those who handle minor settlements will do just about anything they can to avoid this scenario.
The key to avoiding a situation where the parent must be named conservator is to make sure the minor’s parent receives no more than $15,000 prior to the minor turning age 18. Monies paid for attorney’s fees, expenses of litigation, and medical expenses do not count in terms of monies paid to the minor’s parent.
Ok, that is a lot of information so let’s look at an example of how this might work.
Example Case: Settlement Following Serious Injury to a Minor
A minor is seriously injured. He has $100,000 in medical expenses. The parents secure an attorney and agree to pay the attorney 40% of the gross settlement. In the event a settlement is reached, the parents also agree to pay all case expenses (which total $10,000).
The case settles for $500,000. The settlement will appear as follows:
- Gross settlement: $500,000
- Attorney’s fees (40%): $200,000
- Case expenses: $10,000
- Medical expenses: $100,000
- Monies paid to parents: $190,000
This settlement requires that it be presented to a judge (since the gross settlement is over $15,000) and that the parent is named conservator of the child (since the parent is being paid in excess of $15,000).
Now, the judge will be very concerned that such a large amount of money is being paid to the parents. The judge might question whether all that money will be used for the benefit of the minor. The parent could use the funds in the best interests of the parent, not the child. While the judge might approve the settlement, it is more likely the settlement will be rejected.
So what should be done?
Remember, the sticking point here is the monies paid to the minor’s parent prior to the minor reaching the age of 18. In other words, if payment of the money is deferred until after the minor reaches 18 years old, then the judge’s concern of the parents taking advantage of that money is no longer an issue.
So then, what is the solution?
A structured settlement is a settlement paid out as an annuity rather than in a lump sum. Instead of a parent being paid a lump sum at the time the settlement is finalized, the insurance company will purchase an annuity so that the minor receives the money in installments after the minor has reached the age of majority. And the parent can become creative in how the money is paid out so that the minor receives installments at certain points in his life which correspond with life events (i.e., graduating high school, college, etc.).
The annuity can pay out on almost any terms the parent wishes so long as the first installment begins after the minor turns 18. Numerous companies can provide structured proposals including Ringler Associates, Inc. and AIG.
Example Case: Structured Settlement Following Serious Injury to a Minor
So let’s return to our hypothetical. But this time let’s assume some of the funds are structured.
- Gross settlement – $500,000
- Attorney’s fees (40%) – $200,000
- Case expenses – $10,000
- Medical expenses – $100,000
- Funds structured – $180,000
- Monies paid to parent $10,000
As before, a judge must still approve the settlement since the gross settlement is in excess of $15,000. That has not and will not change. In this example, the funds paid to the parent on behalf of the minor are less than $15,000. As a result, the parent is no longer required to be named conservator of the minor by a probate court.
Moreover, the actual monies ultimately paid to the minor will exceed what he otherwise would have received because while the money is sitting in the annuity it is accruing interest. Stated another way, the total money paid to the minor will exceed what he would have otherwise received had his parent received the money at the time of the settlement because of the added interest. It is easy case to make that this payout is in the best interests of the minor. As a result, this settlement will almost certainly be approved by the court.
Injury Lawsuits Involving Minors: Know Your Options
Settlements involving minors are complex. A single misstep can unravel a settlement and force the parties back to the drawing board. The involvement of legal counsel is a must to avoid the many pitfalls Georgia law has created for parties attempting to settle a minor’s claim.
Call HPS. We have handled countless minor settlements and we can handle yours. If you are in such a situation, please call HPS at (404) 400-1175.