Settlements for Minors in North Carolina
When a minor (someone under the age of 18) has a civil claim (personal injury, etc.) in North Carolina, and the parties want to settle the claim, generally, it’s not as easy as signing some stuff and being done with it.
Technically, a minor cannot enter into a binding contract under NC law, so they can’t settle their claim. If a parent/guardian settles a claim for a minor, but when that minor turns 18 they don’t like it, they can come back against the tortfeasor, their insurance company, and their parent/guardian if they don’t have the money or don’t agree on the settlement. That’s a long-term nightmare that few of us in this business would like to think about.
For relatively lower value claims sometimes we let parents settle these anyway. The theory is that for smaller claims, it’s just not worth the hassle of doing it a more thorough way (see below) and the chances of anything coming back from the future of-age victim are low. If we want more finalized settlements for minors, we have to seek judicial approval.
Most of the time, the insurance company offering the settlement makes this distinction; in other words, they draw the line at settlements where they want judicial approval. For some, it’s $2000 and up, others $5000 and up. It can vary a great deal between companies. While we let the insurance companies draw this line, generally, it’s really in everyone’s interest to get this done. So how do you do it? Glad you asked!
Remember when we discussed that the minor can’t enter into a contract? Well, on that same theory, a minor can’t authorize someone to file suit either. So first you need to have a Guardian ad Litem appointed by the clerk of court in the county you plan on filing your lawsuit. Then you get to file your lawsuit, with the authority of the Guardian ad Litem. After that, the GAL and the attorney representing them (if any) is free to deal with the insurance company’s attorney to resolve the case and have a hearing before a judge to approve the settlement. In that instance, when the settlement is approved by a judge, the minor will not be able to come back on anyone, and everyone is as safe as they can be (but are any of us ever really safe?).
There are TONS of issues that come up when handling these. Most people don’t realize that a minor’s injury claim and the parent’s claim for the minor’s treatment costs are separate, and have different statutes of limitations, so you have to watch that. Also, if the minor is a Medicaid recipient, you’ll have to be worried about paying Medicaid back for treatment out of the settlement, AND structuring the settlement in a way to avoid hurting their Medicaid eligibility. Special Needs Trusts can be useful in these situations, as well.
Interesting stuff, huh? Aren’t you glad you aren’t an attorney? Thanks for joining me again. I hope you learned something useful.
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