QUESTION
Can’t we, as parents not use the settlement money for our daughter’s benefit as we see fit?
Asked on Jul 08th, 2013 on Personal Injury - New York
More details to this question:
My wife and I recently settled with the insurance company of our former daycare for out of pocket and pain/suffering money for us and our daughter from injuries she suffered in a playground fall. In the settlement statement, our attorney has stated that we must put the money in some type of account for her and give her the entire pain and suffering amount with interest when she is 18. We had planned to put some in her existing 529 plan and use the rest for stuff for her (like new bedroom suite/camps/etc.) but he does not want to change the language of the settlement statement to basically state that we, as her parents, should manage it in a fiscally responsible manner.
11 ANSWERS
Ronald A. Steinberg
Your daughter's recovery is for her losses (pain, suffering, etc.). You cannot use that for her without reporting to the Probate Court and accounting for every penny. It is NOT to be used for her normal living expenses; that is YOUR responsibility as her parents. Your kid is a human, not a piece of furniture. She has her own rights, and normally, a guardian is appointed to represent the child's best interest in a case settlement. If you have not had the settlement approved in court, someone is asleep at the switch.
Answered on Aug 15th, 2013 at 7:53 PM
Your lawyer is correct that you legally should not be able to touch the funds without petitioning the court for approval [he should be able to show you a simple form which to use to get bedroom furnishings, etc]. In the past, parents have "used" funds for the benefit of the child to the extent nothing is left and the child has only indirectly benefited. Some parents just try to steal the funds. The court has to try to protect the minor. It is your child's pain and suffering that she is being paid for, not yours.
Answered on Jul 14th, 2013 at 9:13 PM
Thomas Edward Gates
Because she is a minor, the court is very particular that she personally benefits from the settlement. It is a requirement to put the money in a blocked account until she is 18. You can get the court to approve the 529 plan distribution (this should have been proposed when the court approved the settlement). Any other use of the blocked account would require court approval. New bedroom suite, camps, etc. are not permitted uses, since these are items that are the parent's responsibility.
Answered on Jul 11th, 2013 at 7:53 PM
James Eugene Hasser
Monies received in minor settlements for the minor have to be used only for the needs of the minor. I also notice in your question that you say that some of the money was for "us". None of the money, except to reimburse you for medicals are for you, unless you were injured in the accident. You are not entitled to any money for (except for medical bills) your child's injuries. Be careful to distinguish a "need" from a "want", as you can wind up being liable for expenditures that are not deemed a "need" by the Court. Your lawyer should be able to provide you with a list of approved expenditures. You may also be able to get one from Probate Court. Look to your attorney for help on this.
Answered on Jul 11th, 2013 at 1:29 PM
Regulatory Attorney serving Spokane, WA
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Deissner Law Office, P.C.
In general, minor settlements are governed by trust/guardianship laws in Washington. That means a 3rd party will have some control over the money and no, you can't use it as you see fit. These laws stem from the Shirley Temple case where her parents wasted all of her money. Parents have an obligation to provide support to a child, so settlement funds are generally only available, prior to age 18, for things that are not part of the normal parental support obligation, including special needs or stuff the parents would not otherwise be able to afford. The Court or a trustee will usually have to approve an early withdrawal.
Answered on Jul 11th, 2013 at 12:47 PM
Immigration Law Attorney serving Pasadena, CA
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Ally Law Firm
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The attorney must follow the order (instruction) the court has set in this matter, if this settlement was completed after a lawsuit was filed. California judges don't like having money simply handed over to a minor's guardian ad litem (e.g., parent) without some supervision as to how the money is handled. Generally, courts order either an appointment of a guardian for the minor's money with full fiduciary responsibility to take care of that money in the best interest of the child, or to deposit the money into a trust account (a "blocked account" or "special needs trust" for minor's with a disability and needing public assistance). Even if this settlement was obtained without having to file a lawsuit, I cannot disagree with your attorney in insisting the settlement terms include depositing the money into a trust account for your child. Ultimately, your lawyer owes a duty of care to his client, your daughter. I'm sure your daughter, when she turns 18, will have her own ideas of how her money should be spent.
Answered on Jul 11th, 2013 at 12:41 PM
Pain and suffering funds for a minor belong to the minor, not the parents. Hence why the funds go into trust for the minor until the age of majority is reached. There are limited exceptions but to access the funds one is to petition the court for permission to use some of the funds for the minor's benefit. New furniture is not likely to be an approved expense. A need for braces might be.
Answered on Jul 11th, 2013 at 11:28 AM
4 Awards
You have counsel,so you should set up an appointment with him to discuss how you want to use the funds for your child's benefit. He has the most knowledge of the circumstances of the settlement and the parameters that the probate court judge set. If all else fails, you can probably petition in the probate court for approval of the expenditure.
Answered on Jul 11th, 2013 at 10:42 AM
Chapter 7 Bankruptcy Attorney serving Syracuse, NY
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Andrew T. Velonis, P.C.
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The availablity of different options may depend on your jurisdiction. I have had a parent place trust funds in a 529 plan, I have had provisions when the account is turned over at age 21 and not 18, and I have arranged for structured settlements, where payments are made by the insurance company directly to the injured party after attaining the age of majority in several installments over a period of years. Special needs can be considered, such as orthodontia, but only if there are no other sources available, such as insurance. Stuff like new bedroom suite/camps/etc. is out of the question. Settlements involving minors must be approved by a court and can only be changed by court order, for good cause shown, and of course the petitioning party would have to convince the judge that any change is a necessity for the minor.
Answered on Jul 11th, 2013 at 10:40 AM
Personal Injury Attorney serving Charlotte, NC
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Paul Whitfield and Associates P.A.
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Don't know where you are and what laws apply but in North Carolina most settlements for underage kids are held by the court til the children reach 18. Parents too often buy beer or drugs or pay the rent and otherwise use the children money improperly. Most insurance companies want the court to approve settlements and the money is placed with the court.
Answered on Jul 11th, 2013 at 10:40 AM
Personal Injury Attorney serving Great Neck, NY
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Goldman & Maurer, LLP
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The funds, by court order, must be deposited into an account for the benefit of your daughter until she reaches 18. You really are not permitted to have any control over the funds and can only invade the account by Court Order.
Answered on Jul 11th, 2013 at 10:39 AM