In New Jersey, pursuing a personal injury claim when an individual is a minor is substantially different then seeking compensation for injuries when the victim is an adult. As minors, children do not have the legal compacity to file a lawsuit or sign a release for settlement on their own behalf. As a result, the child’s parent or legal guardian is the primary person handling the minor’s personal injury claim. However, in order to protect a minor child, New Jersey courts have added additional safeguards to ensure that the settlement is in the child’s best interest. This is because, some parents or guardians believe that when their child collects a personal injury settlement, the proceeds are theirs and they can spend it as they wish. However, when a minor suffers personal injuries, any settlement obtained is specifically intended for the victim. As a result, unless a structured settlement is arranged, the settlement proceeds must be protected until the child becomes a legal adult at age 18.
The Friendly Hearing
In New Jersey, court rules permit attorneys to charge a one-third contingency fee on the first $750,000.00 of a settlement. However, the contingency fee is capped at 25% for minors. After a settlement is reached, the court must approve the settlement for the minor. This hearing for approval is known as a “friendly hearing” and is governed by New Jersey Court Rule 4:44, title “Proceedings to Approve Settlements.” It’s called a “friendly hearing” because there are no attorney arguments, and it is not an adverse proceeding. Pursuant to Rule 4:44-2, titled “Medical Testimony, it provides:
Medical testimony as to the injuries of a minor or mentally incapacitated person given in proceedings to obtain the approval of a settlement shall be that of the attending or consulting physician and may be submitted by the affidavit unless the court, for good cause shown, permits the testimony of other medical experts or in its discretion requires the physician’s personal appearance.
As illustrated above, the court will review medical documents, medical affidavits from doctors, medical reports, and even hear medical testimony to ensure that the settlement is reasonable and fair for the minor. Additionally, Rule 4:44-3, title “Hearing; Order; and Expenses” advises how a hearing is conducted to approve a minor’s settlement, and states:
All proceedings to enter a judgment to consummate a settlement in matters involving minors and mentally incapacitated persons shall be heard by the court without a jury. The court shall determine whether the settlement is fair and reasonable as to its amount and terms. In the case of a structured settlement providing for deferral of all or part of the proceeds thereof, the court shall also satisfy itself, based on the financial security of the obligor or surety and such other relevant facts as may be adduced, of the reasonable certainty that all future payments will be made as proposed by the settlement. If the court approves the settlement it shall enter an order reciting the action taken and directing the appropriate judgment in accordance with R. 4:48A, whose provisions shall also apply to deferred payments under structured settlements. The court, on the request of the claimant or the claimant’s attorney or on its own motion, may approve the expenses incident to the litigation, including attorney’s fees. If the fees of the attorney representing the guardian ad litem are to be paid by the defendant, the defendant shall upon the court’s request make available to it defendant’s complete file in the action.
As shown, the hearing is conducted without a need of a jury and may require discussions of a structured settlement, if necessary, attorney fees, attorney expenses, and other related settlement proposals. The child, parents, and/or guardian generally attend the hearing and court hears evidence of the child’s injuries, review doctor reports, and may converse with the child in a friendly matter. Generally, at the “friendly” hearing a proposed order is submitted for approval by the Judge, which breaks down the settlement amount, legal expenses, medical bills, and attorney fee. After these expenses are subtracted from the settlement amount, the remaining net amount will go to the minor child. While this may seem like a substantial amount of work, a veteran law firm should have no issues. Remember, this hearing is to ensure a minor is protected.
Types of Settlements
There are two primary types of personal injury settlements in New Jersey for minors. First, the settlement proceeds can be held by the Surrogate Court Trust Intermingled Trust Fund until the minor turns 18 years old. The court may require that you ab officially appointed by the Surrogate Court as a guardian of the minor, which may require you fill out several minor guardianship form. During that time, the parent or appointed guardian can apply to the Superior Court of New Jersey, Chancery Division, Probate Part to withdraw funds. However, it must be for the benefit of the child and proof may be required. A standard savings account is not a legal option.
Alternatively, a structured settlement or annuity fund can be arranged to ensure that the minor’s needs are protected and can also provide a financial plan for the future. Some benefits are a high rate of return and untaxed payments. Additionally, it can provide that the minor obtains portions of the settlement at different ages, which prevents a child from using all the funds to buy a sports car or loss it all in Las Vegas. These investment plan may be advantageous for young minors.
A rarer option is a special needs trust. However, this will depend on the severity of the minor’s injuries and the future needs of the minor.
Conclusion
If you are a parent or guardian and have a minor child that is injured, please contact our law firm for your free consultation. We’ll be happy to go over all you options and seek to obtain the best result for you.
