What is a Minor's Compromise?
Insurance company adjusters will not pay personal injury settlements over $5,000 for a minor without a court order approving the settlement so it is final and not voidable. This court order is obtained through a petition by a parent or guardian ad litem and, if the gross settlement exceeds $50,000, a hearing where the judge can ask the minor questions to make sure he or she understands that the settlement is final. Minors generally lack the capacity to enter into contracts, so cases involving minors can be more complicated. A written settlement agreement/release executed by a minor could be voided by the minor until he or she turns 18. The whole process is known more generally as a minor's compromise.
The Purpose of a Minor's Compromise in California
The purpose of a minor's compromise is to protect the interests of the minor. Since approval means that the personal injury settlement is final and not voidable, the court scrutinizes the settlement to make sure it is fair.
Factors that courts consider include:
- The gross settlement amount
- The severity and permanency of the injuries
- The amount of attorney fees and costs that will come out of the settlement
- Where the funds will go if the personal injury settlement is approved
Funds Received - Where do they go?
Courts want assurance that the funds will be used solely to benefit the minor. Unless the funds are needed to pay for ongoing medical care or basic necessities like food and shelter, the funds will almost always be ordered into a blocked, interest bearing account or structured settlement annuity. Nobody - not even the minor or the minor's parents or guardian - will have access to the funds, except for the minor on his or her 18th birthday.
If the personal injury settlement is approved, the settlement is processed and the funds go into the blocked account as per the order. The petitioner and the personal injury lawyer then have typically 30 days to provide proof to the court that the money has been received and deposited. Once this happens, the personal injury settlement is complete.
A personal injury settlement is final - once a case settles, there is no going back to reopen the case later if it turns out the money was not enough to cover the harm. For this reason, you really cannot settle your case without a thorough understanding of its value. Your personal injury lawyer is the best person to help you evaluate the merit of your case, the nature and extent of your harm, and all possible sources of recovery to determine the proper settlement value.
If your personal injury case does settle, several things need to happen before you can be compensated:
- the written settlement agreement/release must be executed,
- all medical liens must be accounted for,
- if the case is in litigation - the trial court and all parties must be notified per California Court Rule 3.1385.
The settlement agreement/release is a legally binding contract, so your personal injury lawyer is the best person to negotiate its terms so that no unnecessary strings are attached. Your personal injury lawyer will also make sure all medical liens are accounted for and reduced so as to maximize your net recovery and prevent any claims for reimbursement down the road. If your case is in litigation, your personal injury lawyer will protect you from incurring any unnecessary delays or sanctions.
Contact Our Personal Injury Attorneys
The minor's compromise is an important safeguard for minors who are injured due to someone else's negligence or carelessness, but it can be complicated and it includes several traps for the unwary. Effres & Effres wants to help!