Injuries To Minors Settlement Procedures In Texas
The information below will explain why a child’s injury case is treated differently from that of an adult. It will also explain terms you will need to know, such as:
- Minor settlement hearing
- attorney ad litem
- annuity, and
- registry of the court
If your son or daughter has been injured in an accident caused by someone’s negligence, you will need to know that the settlement of a child’s claim is different from that of an adult. The difference arises because a minor child cannot enter into a legally binding contract.
THE NEED FOR A MINOR SETTLEMENT HEARING
In Texas, a minor child is defined as anyone under the age of eighteen. (With the exception of one who has been legally emancipated, a rarity which will not be discussed here.) Because a minor cannot enter into a contract and a release between a claimant and an insurance company constitutes a contract, settlements involving minors require a hearing in front of a judge. This is called a minor settlement hearing. At the hearing, the parties present evidence which will allow the judge to decide that the settlement is in the best interest of the child and therefore should be approved. In this way the settling insurance company can obtain a legally binding release absolving them from any further liability in the case. Unless your child’s settlement is very small, insurance companies will insist on a minor settlement hearing.
GETTING THE BALL ROLLING
As the parent of an injured child, it is helpful to know what to expect once your child’s case has been settled with the insurance company. Once settlement is reached, the first thing that needs to happen is to file suit (unless suit was filed prior to settlement). The insurance company’s attorney will draft the pleadings for your attorney’s approval and signature and will pay the cost of filing. The suit will name you, individually and as “next friend of the child” as Plaintiff. The attorney will then ask the court to appoint an impartial attorney to represent your child. This attorney is called an attorney ad litem, but is usually referred to as the ad litem. It is the ad litem’s job to insure that the settlement is fair and that the money the child nets from the settlement will be kept for the child’s benefit alone.
WORKING WITH THE ATTORNEY AD LITEM
Once the attorney ad litem is appointed, your attorney should send him or her all the information needed for the ad litem to evaluate the settlement. This will include the medical records, billing records, medical summaries, crash report, and a settlement sheet detailing the attorney fees, case expenses, medical expenses which will be paid from the settlement, and the amount the child will net from the settlement. It can also include proof of limits from the insurance company and reduction agreements involving medical liens or subrogation. Finally, your attorney will give the ad litem personal information such as your child’s date of birth, social security number, and your contact information so the ad litem can schedule a meeting with you and your child. Your attorney should provide you with the ad litem’s information by way of an introduction, so you will know who will be calling you. Your attorney should also reassure you that the ad litem has your child’s best interest in mind.
THE ATTORNEY AD LITEM’S ROLE
You should be aware of what the ad litem’s objective is – to determine whether the settlement is in fact in your child’s best interest. After all, at the hearing, the ad litem will be asking the Judge to approve the settlement. In short, there will be no hearing, unless and until the ad litem concludes the settlement is in your child’s best interest. In order to make this determination, the ad litem will want a face to face meeting with you and your child to evaluate the extent of the injuries and whether your child appears to have fully recovered from those injuries. If your child will have any future medical needs, the ad litem will need to know whether the settlement addresses those needs or, if not, whether there is sufficient proof that there are not enough limits in the policy to address those needs, as well as proof that there are no other insurance policies that could apply in this case.
WHAT HAPPENS TO THE MONEY?
The money your child will net from the settlement cannot be paid to the parent. It must be either placed in the registry of the court or used to buy an annuity, also known as a structured settlement.
REGISTRY OF THE COURT
Another difference in a child’s injury case is that the money from the settlement must be kept safe for the child’s sole benefit. You will need to know the difference between putting the money into the registry of the court and placing the money in an annuity. Money placed into the Court’s registry will be deposited into the Clerk’s trust account and will grow at typical bank interest rates until it is withdrawn after the child’s eighteenth birthday. When interest rates are low, the money will not gain much, even in the case of a young child where the money may sit in the clerk’s account for many years. The main trade-off for keeping your child’s money in a low interest bank account is that this is the safest place for your child’s money. If you decide the money should be placed in the registry of the court, either your attorney or the attorney ad litem will deposit the insurance company’s funds into the District Court’s account as soon as they are received from the insurance company. You should be given a copy of the receipt showing the deposit has been made. When your child turns 18, he or she simply needs to go to the clerk’s office and present proper identification. The clerk will then issue a check for the amount deposited plus any interest earned.
If you can tolerate a little risk, you should consider an annuity. There are a handful of insurance brokers that specialize in court approved annuities and one of those brokers will need to be brought into the case to handle the annuity purchase. The advantage of an annuity is that the interest rate is higher than the clerk’s bank account. Also, the principle and the gains are both tax free. The downside is that there is a small up-front fee to purchase the annuity. This fee is usually more than offset by the amount of gain at the end of the annuity. If it is not offset, then the money should be put in the registry of the Court. Also, there is a risk that the insurance company that sold the annuity may go under and cease to exist. However, most brokers will only deal with the strongest rated companies to insure safety. In the many years I have been handling children’s injury cases, I have never heard of an annuity being lost.
There are many ways to structure an annuity, but the most popular is usually referred to as the college plan, so called because it is structured to disburse payments to your child at the age when he or she is expected to begin college, with additional payments coinciding with each semester for four years. While this works best for a lot of clients, it may not be the best plan for you and your child. You should consult with the insurance broker to tailor a payout structure you believe will best suit your child’s needs.
Once the decision is made as to where you want your child’s money to go, you are ready for the hearing. This hearing shouldn’t take more than fifteen minutes. You will find the hearing to be very cordial and friendly – everyone will be in agreement and there will be no cross examination nor any excitement like you see in the movies or television. Testimony is not heard from the witness stand nor do the attorneys sit at counsel table. Instead, everyone involved will group around the Judge’s bench and testimony will be taken with everyone standing in a semi-circle. Usually, the only testimony heard is from the parent. There will be a court reporter taking down the testimony, so be sure to keep your voice up. Usually, the first attorney to question the parent is the attorney ad litem, though sometimes, the ad litem will prefer for your attorney to question you first. After that, the defense attorney hired by the insurance company will ask you a few questions.
In cases where I handle the testimony, I structure all my questions as leading questions. In other words, my question itself will suggest the answer. Even more, nearly all my questions can be answered with a simple “yes”. This is because I know my client will be nervous and I want to make the process as simple for them as possible. I also know that judges are busy and want to hear only the minimum amount of evidence needed to make an informed decision. You should be aware that often times, there will be three or four minor settlement hearings scheduled at the same time and the parties waiting for their turn want to get done and get on with their day. For this reason, the attorneys should be brief and to the point. At the conclusion of the testimony, the attorneys will ask the Judge to approve the settlement. There will be some papers to sign if they weren’t signed before the hearing began and the parties will be free to go.