Getting a Recovery for Your Child’s Injuries and Getting the Court’s Consent to a Settlement (Part IV)


    In rare instances where the child has suffered catastrophic injuries, the settlement will have to provide for the future care of the child.  The infant’s compromise will be more complex than the typical settlement discussed in Parts I, II, and III

In a catastrophic injury, the attorney, parents, and court will have to provide for the child’s present and future needs.

Here is an example showing some of the considerations:

The child’s case settles for $4,500,000.  The child has suffered brain injuries at birth which will require life-time medical and custodial care. 

One third of the settlement, i.e., $1,500,000, goes to the attorney for his legal fee for prosecuting the case.  The attorney, parents, and court have to decide on how to manage the remaining the $3,000,000 for the child’s benefit.

It would be imprudent to place the proceeds in a bank account which the infant could withdraw upon reaching 18 years of age.  First, the child needs the funds in the future for his medical and income needs which will have to be apportioned during his life.  Second, the child may not have the mental capacity to manage the funds at the age of 18.

It is determined that the parents will be named the child’s legal guardian.  They must make commence a separate proceeding in court to be named legal guardians.  There is a distinction between being a “legal guardian” and “natural guardian”.  The parents are automatically the natural guardians.   However, legal guardianship will entitle the parent to act on behalf of the child, such as manage and spend the child’s money.  The guardian may have to manage the child’s affairs for the rest of the child’s life.  A separate attorney will be used for the guardianship proceeding as well as a possible special needs trust which will be discussed below.

The father, as the guardian, may manage the funds and spend them, when necessary for the child.  The expenditures for the child will have to be approved by the court in the future.  In the alternative, the parent may have to make annual reports to the court so that the court is assured that the funds are being spent solely for the child’s benefit.   Generally, the court will appoint an outside attorney to oversee the administration of the incompetent’s affairs. 

Some of the expenditures for the child can include medical care, rehabilitation, speech therapy, making the home handicap accessible, and special education.

The parent may determine that some of the net settlement funds should be available in a liquid investment, such as government bonds, and the remainder can be used to purchase an annuity for projected future expenses.  The decision would involve consultation with a medical planner.  For example, it may be determined to keep $300,000 in government bonds, and use the remaining $2,700,000 to buy an annuity that would pay $50,000 a year for 40 years.

Also, the receipt of the funds may have to be structured so as to ensure that the child will continue to receive government benefits, such as Medicare or Medicaid.  The net funds may have to be deposited into a “special needs trust” so that the child can continue to receive government benefits for medical care, such as Medicaid or Medicare or both.  In this instance, it is necessary to consult another attorney who will create the special needs trust.

If your child has been injured in an accident, please feel free to contact me for a free consultation at 800-581-1434 or write to us at letters@seitelman.com.

Mark E. Seitelman, 2/24/10, www.seitelman.com.

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One Response to Getting a Recovery for Your Child’s Injuries and Getting the Court’s Consent to a Settlement (Part IV)

  1. […] our prior posts discussing the settlement of a child’s case.   See parts I, II, III, and IV.  Another exception is a class action […]

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