Settling a Minor’s Case

I have received several questions recently about settling claims involving minors. Every case and state law is different, but there are some general principles. Since I know Georgia law best, I will use it to illustrate the issues. Unlike settling a claim for an adult, most states place quite a bit of oversight on parents and guardians to ensure that the money actually is used to benefit the child.

Who Must Approve a Settlement

Whenever you are dealing with a claim by a minor, settling the case will require the permission of every adult who has the authority to act for the child. Georgia law provides that a verdict forecloses any issues about proper representatives for a minor, O.C.G.A. § 9-2-28, but it doesn't have any comparable provision for settlements. Thus, getting agreement from only one of multiple guardians leaves open the possibility that another guardian can later contest it. Even successfully defending that claim can cost the client money, so it is best to avoid the issue with a solid settlement. I have never seen such a claim, but I have had a late-arriving biological parent almost scuttle a settlement because I did not pay attention to these questions early on.

In most cases, the proper guardians are the biological parents. If the parents are still married, then it usually is a simple matter to get both parents to sign the settlement. If the parents are divorced, then, you will have to find out what the custody decree says. According to O.C.G.A. § 29-2-3, the parent with sole custody (see O.C.G.A. § 19-9-6(11)) is the natural guardian. However, if both parents have legal custody (a very common provision), then "both parents are the natural guardians of the minor." O.C.G.A. § 29-2-3(b). In that case, you will need the agreement of both parents, not just the custodial parent, to avoid the possibility of a later claim by the second parent.

If the child's parents were not married, and the father has not legitimated the child, then the mother has "all parental power." O.C.G.A. § 19-7-25. Thus, you will need to identify the biological father and determine as best you can whether he ever has gone through legitimation procedures.

You don't need approval from step-parents unless they have adopted the child. Adoptive parents have all of the rights of biological parents.

If the parents are deceased and a probate court has entered an order, then you need o review the order. Sometimes courts appoint one person as guardian of the child's person, and another person as conservator of the child's property. If the child has property worth more than $15,000.00, the law requires a conservator. O.C.G.A. § 29-3-1. In that case, only the conservator can settle the claim. O.C.G.A. § 29-3-3(b).

Because you need all of this information as soon as possible, it should be in your earliest discovery requests. Ask for a copy of the child's birth certificate, any custody orders, any legitimation orders, and any guardianship or conservatorship orders. Ask in interrogatories and depositions for the identity and whereabouts of biological parents. Account for the step-parents as well.

How The Settlement Process Works

Georgia law requires varying levels of court involvement, depending on the amount of the settlement. If the gross amount is less than $15,000, then the guardians or conservators can settle without court approval. O.C.G.A. § 29-3-3(c).

If the gross settlement is more than $15,000.00, then a court has to approve. If the settlement is pre-litigation, the probate court must approve, O.C.G.A. § 29-3-3(d). If there is litigation, the court where the action is pending must approve. O.C.G.A. § 29-3-3(e).

Next, the focus turns to the net settlement, defined as the gross amount minus attorney's fees, expenses of litigation, medical expenses, and present value of amounts the child is to receive after becoming an adult (e.g., structured settlements). If the net settlement is $15,000.00 or less, only court approval is necessary. O.C.G.A. § 29-3-3(f).

However, if the net settlement is more than $15,000.00, then the guardian must petition the probate court to be appointed conservator. O.C.G.A. § 29-3-3(g). That process is time-consuming and onerous, particularly the requirement of a bond, O.C.G.A. § 29-3-40, that is double the amount of the settlement, O.C.G.A. § 29-3-41. The most common way around the conservatorship requirement is a structured settlement that holds all but $15,000.00 until the child becomes an adult. O.C.G.A. § 29-3-3(h).

Ongoing Responsibilities

If the settlement amount requires a conservator, then the court will have jurisdiction to oversee spending until minor reaches the age of majority. In Georgia, a conservator must submit a budget and get court approval. Then every year thereafter, the conservator must submit a report and new budget, O.C.G.A. § 29-3-60. If the conservator spends money without court approval, then the court can require him or her to repay those sums.

Settling a case for a minor has some unique technical aspects in all states. Attorneys in those settlements need to start planning for those questions in beginning with discovery all the way through planning how to structure payments.  Paying attention to those details will help avoid problems in the long term.