Disbursement of the Minor's Settlement Proceeds
The representation of a minor in a personal injury case presents a set of entirely unique issues, all of which focus first and foremost on the best interest of the child. While wincing may be an initial reaction to this less than straightforward process, it is important to remember that your minor client is substantially better off with you than without you.
Immediately assessing that your client is, in fact, a minor (under the age of majority in North Carolina) in the eyes of the law, is essential and will save you unnecessarily wasted time. North Carolina General Statute make clear that no minor can sue, or be sued, during infancy and must be represented in any non-criminal action, pursuant to Rule 17(b) of the North Carolina Rules of Civil Procedure.
Although the procedural and legal challenges you have undoubtedly run into thus far are vast, the end is nearly in sight. This article assumes that you have successfully completed the following necessary documents:
• Application for Appointment of Guardian Ad Litem;
• Order – Judicial Approval Appointing Guardian Ad Litem;
• Summons, Complaint, and Answer (usually);
• Application for Approval of a Minor Settlement; and,
• Judicial Approval the Minor’s Settlement.
The minor’s settlement proceeds can be disbursed in the following three ways:
Disbursed to the Clerk of Court
The most judicially economic means for disbursing settlement proceeds is to have the Defendant pay them directly to the Clerk of County in the county where the action is filed. This requires completing some very basic paperwork, which includes the minor’s social security number and address.
Once the Clerk has received the paperwork and the settlement proceeds, the Clerk will hold the funds in trust. An important note to mention to your client, and the guardian, is that the Clerk will usurp five percent of the amount deposited as a fee for the administration of the trust. The funds will remain in trust until the minor becomes of age.
This method of disbursing minor’s settlement funds is used most frequently, likely due to being simple and low-risk.
Investment via Annuity
A minor, through their Guardian, can purchase an annuity with settlement proceeds. In theory, an annuity is a one-time premium, which pays a fixed amount of money over a fixed amount of time. With this method, no funds are physically deposited in the care or custody of the Clerk of Court.
Use of an annuity may still require judicial approval. It is an excellent idea to ensure that you can provide the judge with information about the annuity, the annuity, investors, investment company, and additional surety.
Any structured settlement from an annuity should be reasonable and in the best interest of the minor.
To Guardian for Investment
Disbursing funds to the Guardian is the most technical method, but can also be the most financially beneficial to the minor. Any individual applying to stand as Guardian of a minor’s estate must be approved by the Clerk of Court and properly bonded according to state statute.
Ensuring that the proceeds are received by the Guardian, to invest, is simply a matter of requesting the necessary paperwork from the Clerk ahead of time and seeking the courts approval. A guardian’s authority over the minor’s settlement proceeds is wholly governed by North Carolina statute; therefore, it is possible that a judge may inquire about a guardian’s abilities to invest the settlement proceeds adequately. The investing of settlement proceeds should be done in the same prudent and careful manner that any ordinary businessperson would use.
Submitted by Attorney Jared W. Pierce
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