Can I Settle My Child’s Claim on Their Behalf?
The short answer is “yes.” However, it is important to remember that minor children are not permitted to act on their own behalf. Although minor children (or “minors”) are not permitted to represent their own interests, their interests can be protected by allowing a disinterested third party to fight on the minor’s behalf. This disinterested third party is called a Guardian ad litem.
If your minor child does not have a general or testamentary guardian, it is necessary for you to explore the appointment of a Guardian ad litem for your child. The appointment of a Guardian ad litem is the most common practice in North Carolina for seeking judicial approval of a minor settlement. A Guardian ad litem is required to be appointed before or at the same time as the filing of the minor’s case. The specific Guardian ad litem may be another lawyer, a family member, or a trusted friend.
It is important to note that when an applicant applies to be the Guardian ad litem for a minor child, the appointment application for Guardian ad litem is typically received and reviewed by the Clerk of Superior Court in the county where the action lies. This appointment application is called a Petition for Appointment of Guardian ad Litem. This petition for an appointment is typically sent to the county clerk with a signed Consent to Appointment and a Proposed Order of Appointment for the clerk to sign.
Simply put, the lawyer doesn’t represent the Guardian ad litem’s personal interest; the lawyer represents the minor child and the minor’s Guardian ad litem in his or her official capacity as a representative of the minor’s interest.
Additionally, if a person has been appointed as Guardian ad litem for a minor and that individual begins to act in a manner that is not in the best interest of the minor, it is possible to petition the court for the removal of a particular Guardian ad litem.
Payment to the Clerk of Court
The simplest and most cautious approach is to ensure that all funds for the minor child are placed into trust with the County Clerk of Clerk. Although it does not give the parent or the Guardian ad Litem physical control over the settlement money, it eases one’s mind to know that the money is in good hands and you are not responsible for it.
In having a child’s settlement money paid to the Clerk of Court for the county in which the Judgment was approved, the Clerk will be the responsible party, and that is less responsibility on your shoulders. Once money has been paid to the Clerk, the Clerk will invest the money for the benefit of the minor child in secure conservative investments. This will allow the interest on the settlement money to accrue over time, and also prevent the taxation of the settlement money. One thing to note is that this avenue does require a 5% holding fee be paid to the Clerk for their work, and that money comes out of the child’s settlement money. However, this 5% fee may be worth the easing of your mind, avoidance of taxation, and long-term security of the funds. And once the child reaches majority, they will be able to apply for receipt of the funds that have been held. Once this is approved by the Clerk, the money will be released to the child to do with as they please.
Investment into a Structured Settlement Annuit
A structured settlement is when a series of payments are made to the Plaintiff over a period. This can be beneficial because you can structure the settlement payments to be made in connection with certain ages or events. A structured settlement may be used in conjunction with settlement planning tools to help preserve a Plaintiff’s Medicare benefits.
Often the at-fault insurance company will purchase an annuity in connection with a structured settlement. This allows them to take care of their end of the settlement and move on with their lives instead of having to worry about having the money and making the payments at the appropriate times in the future. These annuities are purchased from an insurance company that makes the settlement payments to the Plaintiff on the Defendant’s behalf at the scheduled times as defined by the settlement.
It is important to ensure that if you do decide to utilize a structured settlement that the obligation to pay continues in the event of the minor’s untimely demise. While the settlement can be favorable for several notable reasons, there are several reasons that make it a poor choice. Most notably, an annuity company is not strictly liable for any loss of funds, like a Clerk of Court would be. As such, if the annuity company files bankruptcy or simply doesn’t protected the funds properly, there may be very little recourse available to the minor or their Guardian on their behalf.
Still, as the guardian of the injured minor child, you should be wary of these annuities. Although facially appealing, there are still variables that should be considered in connection with which Insurance Company the annuity is bought from. Smaller, less-known insurance companies may not be as secure as larger, highly known insurance companies. And, you are not the one who gets to choose the insurance company, although ideally you can make suggestions as part of the settlement agreement. In addition, every insurance company may offer a different interest rate. Often this can be lower than the interest rates offered through the other methods of payments. Therefore, one of the other forms of settlement payment might be more appealing just based on the interest rate attached, and the security of knowing exactly where the money is.
Payment to the Guardian of the Child’s Estate
Under N.C. Gen. Stat. § 35A-1232, the Guardian of the Child’s Estate may receive the payments directly which are to be “deposited in an account with a financial institution upon condition that the money will not be withdrawn except on authorization of the court.” However, under N.C. Gen. Stat. § 35A-1231, “[b]efore issuing letters of appointment to a general guardian or guardian of the estate the clerk shall require the guardian to give a bond payable to the State.” The value of this bond is determined based on the value of the ward’s personal property and the rents and profits of the ward’s real estate. If you are unable to pay this bond, this may not be the option for you.
If the bond is not an obstacle for you and you are in fact comforted by having more control, then there are benefits to this form of payment. Most importantly, you are able to invest assets of the ward as a reasonably prudent businessperson would. This allows you greater flexibility in where and with who the settlement money is placed. As the guardian, you can find the highest interest rate offered and then place the money for safekeeping with that financial institution.
Best Interest of a Child
It should be emphasized again that the Court protects the money from the Child’s settlement to ensure the best interest of the child. This means that any withdrawal from the account that you deposit the money in must be approved by the Court. In addition, you cannot use these funds to pay for the child’s ongoing needs, since this is deemed by the Courts to be a parental obligation, and the other side of the settlement that came directly to you covered medical expenses.
In sum, there are options as to how the minor’s settlement payments can be made. These should be determined and submitted to the Court for approval as a part of the Settlement Agreement. The court will review the settlement and the desired payment methods, and upon approval, that method will govern how and to where the money will be distributed. Then once the child reaches maturity or an agreed-upon age beyond that, the money will be ready for them to access. Until then, it will sit idly and hopefully continue to accrue based on the interest rate attached to the chosen method.
What Do Courts Look for to Give Judicial Approval of a Settlement?
In North Carolina, the courts have been provided authority to protect and govern over the property of minors and will take such action as is necessary to protect their interests.
Considering that North Carolina law requires a judge to approve a minor settlement, the parties cannot execute the settlement agreement before judicial approval. Put more specifically, parties are permitted to negotiate and agree on a settlement; however, the settlement agreement between the parties will not be binding on the minor child unless a court of competent jurisdiction approves the settlement.
A minor settlement hearing, wherein the judge reviews the facts and circumstances surrounding the case, has been designed to act as a preventive measure to prevent minors from being taken advantage of. The unfortunate part of this process is that the minor and the Guardian ad litem will typically have to go to court as part of the hearing for approval.
While this minor settlement hearing is a fairly simple process, it may be a good idea to have a competent and experienced lawyer to assist you with the process. However, most minor settlement hearings last for less than 30 minutes.
After the minor’s Guardian ad litem or the attorney presents the case, the judge will then ask the opposing party, likely the attorney for the insurance company, to present any other facts and circumstances that they believe are relevant. Thereupon the judge will likely begin asking questions about the injuries, treatment, scarring, emotional impact and any other factor that the judge believes is relevant.
It is typically a good idea to ensure that you have the relevant medical bills and records, outstanding bills, subrogation interests, and any other relevant documents with you during the hearing in the event that the judge requests to review the information.
It is important to remember that the process of getting to a minor settlement hearing involves drafting and filing a “friendly lawsuit.” A friendly lawsuit in this instance means that the parties have determined the desired outcome and are filing a lawsuit as a mere formality. The process of filing a friendly lawsuit typically involves the lawyer for the insurance company drafting a complaint, summons, answer, settlement agreement, motion of judicial approval, and an order for judicial approval.
In most minor settlement hearings, the judge will consider the following component:
- The relative strength of the minor’s claims for relief
- The relative strengths of the at-fault party’s defenses
- The minor’s injuries and medical treatment
- The permanency of the minor’s injuries
- The extent of insurance coverage, if any
- The settlement amount and the net recovery to the minor
- The outstanding bills and liens
- The opinions of the minor’s Guardian ad litem
When is the Best Time for a Minor Settlement?
Timing is one of the more important things to consider when you’re navigating your child’s settlement. Your decision should be shaped by a complete determination of your child’s damages, as well as by the applicable statute of limitations.
Keep in mind that the ultimate goal of settling a minor’s personal injury claim is to make the minor child whole again. The theory of damages in a case like this is to put the plaintiff in as good a position as she was in the moment before the accident occurred.
With that said, it’s important to know that the full scope of damages isn’t always apparent in the hours or days after the accident. In some cases, it can take months or even years to know just how severe the injuries are and whether and to what extent the injured person will recover.
Without knowing the ultimate severity of the injuries, it’s impossible to determine the monetary value of the injured party’s damages. For this reason, it is important to gain a full and complete understanding of the minor’s injuries before proceeding. However, please be mindful of the applicable statute of limitations and be sure not to wait too long.
The statute of limitations is a legal concept that defines the window of time in which a claim can be brought. A statute of limitations is a statutorily imposed deadline that requires you to file a claim within a certain amount of time after the accident. For adults over the age of 18, the statute of limitations in North Carolina is three years from the date of the accident for a claim of negligence.
However, the law in North Carolina regarding minor children’s statute of limitations is significantly different. With minor children, the statute of limitations states that “[a] person entitled to commence an action who is under a disability at the time the cause of action accrued may bring his or her action within the time limited in this Subchapter, after the disability is removed[.]” N.C. Gen. Stat. § 1-17(a) (2009). It is important to note that in North Carolina being under the age of 18, a minor is considered a disability. It is nothing more than a legal term to describe minor children.
As such, while the minor child is under their “disability,” until they reach the age of 18, the minor will have three years after their 18th birthday to bring the claim for negligence in their personal injury claim. This does not mean that you, the parent, are entitled to extend the statute of limitations for your claim for medical expenses or loss of services when your child is injured.
For example, let’s say that your 14-year-old daughter was injured in a car accident on January 1, 2020. Let’s say that she went to the emergency room, her primary care physician and a physical therapist to be treated for her injuries, and you paid a total of $1,000 for her treatment. Since your daughter is a minor (under a legal “disability”), she can bring her claim for personal injury at any time before three years after her eighteenth birthday. However, you are required to bring your claim for medical expenses and loss of services before January 1, 2023.
Parents have attempted to circumvent this legal anomaly by “assigning” their claims to their child, thereby extending the statute of limitations for the parent’s claim as well as the child’s. Judges are not amused by this, and will not allow you access to a larger statute of limitations by assignment. See Ellington v. Bradford, 242 N.C. 159, 162, 86 S.E.2d 925, 927 (1955 ).
Does the Statute of Limitation Change After the Appointment of GAL?
North Carolina provides for a second exception related to minors and the statute of limitations, namely involving the appointment of the Guardian ad litem. The exception states that once a GAL is appointed, the statute of limitations will begin to run only as to the claims and parties which the GAL has been appointed to pursue. See Jefferys v. Tolin, 90 N.C.App. 233, 235, 368 S.E.2d 201, 202 (1988). Let’s illustrate this exception by going back to the previous example.
Your 14-year-old daughter is injured in a car accident on January 1, 2020. In the car accident, she was traveling through an intersection when she was struck simultaneously by an at-fault driver on the left side of her car. On February 15, 2021, a GAL is appointed to pursue your daughter’s personal injury claim against the at-fault driver. The statute of limitations will begin to run against the claim for negligence against the at-fault driver at the time of appointment for the GAL. This means that the claim must be brought before the court on or before the expiration for three years from February 15, 2021.
It is important to note that where a GAL is not appointed, the statute of limitations will not begin to run until the minor’s 18th birthday. The general exception involving the appointment of the GAL only applies to the claims for which the GAL was appointed. As such, if a minor has been involved in two accidents and a GAL is only appointed to one claim, the statute of limitations is unaffected in the claim where the GAL does not represent the minor.
Remember that a parent’s claim for medical expenses, for example, is not the same a minor’s claim for damages. And a parent’s claim for damages is not subject to the same protection provided to minors by way of the statute of limitations. It is always recommended to have the GAL a few weeks before seeking judicial approval of the settlement. Appointing a GAL at the right time ensures that you are protecting your claim and your legal interests.
GAL Payment
As discussed above, the two most common options for appointing a GAL are to appoint the parent or to appoint a neutral third-party, often an attorney. Where the GAL is the parent of the minor child, it is highly unlikely that the judge would permit the parent to claim or assert a fee for their services as the GAL.
However, it is commonplace for an insurance company and judges to approve fees associated with a GAL’s service to a minor child where the GAL is a third party or attorney.
As such, there are typically two ways in which the GAL may receive a fee for their services to the minor child. First, the defendant or his liability insurance carrier may agree beforehand to pay the reasonable fee. Alternatively, where the insurance company will not agree to a fee for a GAL, the GAL or the minor’s attorney may request reimbursement of costs and expense, including a reasonable fee for the GAL services.
While it is difficult to accurately predict what reimbursement an insurance company may be willing to offer a GAL for their services, we have typically seen and heard fees ranging from $100 to $750. However, for extremely complicated cases, it may be reasonable to consider asking the court for an hourly fee as opposed to a traditional flat fee. Regardless of what you ask for, please be sure that you are prepared to defend your assertion with a reasonable and thoughtful response.
Our Durham settlement attorneys are available to help you if your child has been injured. Call us at (919) 887-7892 or contact here.
