Personal Injury Settlements for Minors: What You Need to Know

Who is Considered a Minor?

In the eyes of the law, a minor is a child or teenager under the age of majority. Though this definition can vary in the US from state to state, Oregon defines anyone under the age of 18 as a “minor”.

What is a Conservator?

In Oregon, a conservator or “guardian of property” is named by the court and appointed to manage the financial and real assets of the minor. The conservator’s responsibilities last until the court relieves them of their duty – which may be due to the court appointing someone else, or the minor has reached adulthood and no longer needs a conservator.

What is a Structured Settlement for Personal Injury?

A structured settlement – at its most basic definition – is a trickle of regular payments over time to someone who settled or won a lawsuit. It’s frequently used to protect money recovered on behalf of a minor injured in an accident. This article has in-depth advice on planning a structured settlement.

What Happens When a Minor Wins a Lawsuit or Settles a Personal Injury Claim?

Several laws govern the personal injury claim of a minor, depending on how much money is recovered.

1. Recovery of $10,000 or less

If the amount recovered is $10,000 or less, ORS 126.700 guides Oregon law. The money may be paid out to the minor’s parent(s), custodian with whom the minor lives, or a guardian. Except in cases where a conservator has been, or is in the process of being, appointed.

The money could also be deposited into a bank account solely in the minor’s name. Oregon law allows minors to open accounts in their own name if they are “capable of establishing and maintaining a bank account in their sole name for their sole use” (banks however may not always honor this).

In addition, the insurance company for the at-fault party may not agree to pay the settlement money to the minor’s parent or custodian or deposited into the minor’s account. Why? The law does not give the parent or custodian the legal authority to sign a settlement agreement, releasing the at-fault party from liability.

2. Recovery of $25,000 or less

When the amount recovered is $25,000 or less, ORS 126.725 gives a parent or custodian the legal authority to settle a minor’s claim against the at-fault party. This again is given no conservator has been appointed for the minor. The parents or custodian are required to complete an affidavit, and the money must get deposited into a bank account in the name of the minor. Another option is to purchase an annuity or structured settlement.

There are several steps necessary to set up these accounts, and many banks are ignorant of this process and reluctant to do it. You should consult with a personal injury attorney to make sure you follow the law.

3. Recovery of More Than $25,000

If more than $25,000 is recovered, the law is adding another layer of security for the minor. Your personal injury lawyer must petition the court and show that the money will be kept safe for the minor. A conservator must be appointed and the funds must be held in the conservatorship or a structured settlement.

Having the money managed by a conservator however has a major drawback: it’s expensive. The conservator, especially if it’s an institution such as a bank, will probably charge a fee to manage the funds. In addition, an attorney must be paid to file annual accountings showing the court that the funds were spent for the benefit of the minor.

Benefits of Personal Injury Settlements for Minors

There are 3 benefits to personal injury structured settlements:

1. They are less expensive to maintain. There is no conservator or attorney to pay to manage the funds or file annual accountings.
2. They completely protect the money for the benefit of the minor.  They function a bit like a life insurance policy which pays out to the minor after he or she turns 18.
3. No taxes are incurred on the interest the settlement earns. It’s a good idea to get help with this aspect from a personal injury attorney who has experience working with a structured annuity company.