Whenever a child’s personal injury is settled, the court must approve the settlement.
The court must not only approve the total amount of the settlement, but the allocation of the funds, the manner that the funds will be held for the child’s benefit, and the attorney’s fee. In comparison, a competent adult need not obtain court approval to settle his case.
The law calls a child under the age of 18 an “infant.” The court’s approval of the settlement is an infant’s compromise order.
The reason for obtaining approval is that the child is the ward of the court. The court will seek to protect to the child from the possibility that the parents might spend the money for themselves if the money were to be paid to the parents. After all, it is the child’s money, and he may need that money during his adulthood for college, future medical care, training, household care, etc. Therefore, the court will tailor its order so that neither parent nor child can touch the money, and only the child can withdraw the money from a bank when he reaches 18 years of age.
Here is an example of how the settlement procedure works:
The infant, a 10 year old, sustained a fractured wrist when he was struck by an automobile while playing in the roadway.
A lawsuit is brought, and the driver’s insurance company offers $45,000 to settle the case. This is a fair settlement based upon the driver’s defenses (the child darted-out in the middle of the street), the amount of insurance available ($50,000 policy), and the child’s lack of a permanent injury. Essentially, the fracture healed, and the child has no residual injury or limitations. The child participates in sports without difficulty.
The attorney recommends the settlement, and the parents agree. The attorney must then prepare an infant’s compromise order so that the court can review and approve the settlement. These papers include an affidavit from the parent stating the facts and recommending the settlement. There will also be an affirmation by the attorney explaining why this is a favorable settlement. Last, the attorney will arrange a physician to examine the child to determine that the injury has resolved, and the physician will sign an affirmation to the effect that the injury has healed and that no further treatment is necessary. In this case, the child would be evaluated by an orthopedist.
The attorney puts together a proposed compromise order along with the parent’s affidavit, the attorney’s affirmation, and the physician’s affirmation. Also, exhibits are annexed, such as the police report and hospital and medical records. The entire package is presented to the court for review.
The court will contact the attorney for a hearing which the child and parent must attend. The term ‘hearing” is a bit of a misnomer in that it is rarely on the record or even in the courtroom. Generally, the judge will meet informally with the parent, child, and attorney in the judge’s chambers, i.e., office. The judge must be satisfied that the settlement is in the infant’s best interests. Often, the judge will ask the child if he has any problems and is able to participate in gym class and sports. In many instances, the meeting is very pleasant and comforting to the parent and child in that they see that the judge is interested in the child on a personal level. The parent and child are also reassured that the settlement is the right thing to do. The judge might have some questions to the attorney, such as whether all medical bills have been paid. In some rare instances the judge might require more information before he signs the order, and the attorney may have to submit further information at a later date.
At the hearing, if the judge is satisfied, he will sign the infant’s compromise order prepared by the attorney. The judge will determine the attorney’s fee. In this case, the fee is $15,000. Most important, the judge will order that the balance of $30,000 be deposited in a savings bank by the parent for the benefit of the infant and that the infant cannot withdraw the money until he reaches 18 years of age. The parent picks a branch of the Apple Bank for Savings which is located near the courthouse.
Generally, the court will direct that the infant’s net settlement be deposited into a savings bank. Although the bank interest rate is lower than can be obtained in the stock market, the court wants to make sure that the funds are safe and will be available to the child when he turns 18. Also, the court will want the funds deposited in a bank that is either in the county or the immediate county to the courthouse.
The attorney gets a copy of the order, and he sends it with the parent’s release to the insurance company. The insurer sends two checks to the attorney, one for the fee and the other for the bank. The attorneys gives to parent the check for the bank along with a copy of the order so that the parent can open the account. Typically, after the account is opened nothing happens until the infant turns 18 and wishes to either withdraw it or roll it over into a new account. Of course, the account is accruing interest until withdrawal.
The foregoing is a simple example of the infant’s compromise. Future articles will discuss more complex and unusual situations.
Mark E. Seitelman, 2/3/10, www.seitelman.com.