In Colorado, the settlement of a minor’s personal injury claim requires more than a release of all claims executed by the minor’s parents. Without approval of the terms and conditions of the settlement by a Probate Court with appropriate jurisdiction, the minor’s claim is not extinguished.
The following will address frequently asked questions about resolving and extinguishing personal injury claims of minors.
- A minor is a person under the age of 18 years C.R.S. § 13-22-101. Once the minor attains the age of 18 years, the minor is deemed competent and may enter into any legal contract and manage his/her estate in the same manner as any adult person (i.e., sign a Release of all Claims).
- There is no minimum amount that exempts a minor’s settlement from Court approval.
- A minor’s claim is not extinguished until a Probate Court approves the settlement terms.
- A release signed by the parents is voidable by the minor upon attaining the age of majority, (18 years).
- The statute of limitations does not run against a minor until the age of 18 years plus the period within which to bring the claim (i.e., 18 years plus 3 years for auto related claims). (Exception: If the minor had a prior conservator or Guardian Ad Litem appointed, the statute of limitations will begin to run against the minor’s claim on the date that the claim accrues, which is similar to an adult’s claim).
- A minor’s claim is not extinguished until the Probate Court approves the settlement terms. However, for a small settlement or inconsequential injuries, the insurance carrier may make the business decision to forgo probate approval considering the cost that will be incurred, and instead, risk the remote potential that the minor will pursue the claim after turning 18 years of age. The insurance carrier should consider the nature of the injury, the amount of the settlement, length of time remaining on the statute of limitations and the likelihood for the claim to be pursued by the minor, perhaps many years into the future, when witnesses and evidence may be unavailable.
- Either the child or the parent may recover the child’s medical expenses prior to the child attaining the age of 18, but double recovery is not permitted. Rudnicki v. Bianco Co. Supreme Court, December 13, 2021, CO 80.
- If the biological parents are not together, keep in mind that each parent has the right to bring a claim for economic damages (medical expenses) and frequently there are arguments between the biological parents over how to account for the settlement proceeds. Consequently, notice of the Petition for Approval of the Settlement must be given to both parents, as well as Notice of the Hearing regarding the settlement terms.
- While counsel for Plaintiff can handle the probate proceeding, keep in mind that Plaintiff’s counsel does not have the same interest that Defense counsel has in correctly obtaining probate approval of the settlement terms. Consequently, it is recommended that Defense counsel draft and file the pleadings.
- Proper venue for the probate approval is the county in which the minor resides. A few counties (El Paso in Colorado Springs) will require an independent Court appointed Guardian Ad Litem to review the settlement terms, meet with the parents and Claimant and prepare a report advising the Court of the findings, regardless of the nature and extent of the minor’s injuries. The Court will also request that the carrier bear the fees and costs of the Guardian Ad Litem’s services. (Generally, $1,500-$2,000).
- Generally, if the net settlement amount to the minor is below $10,000, a conservator is not usually required by the Court. On the other hand, if the net settlement to the minor is greater than $10,000, the Court will usually require the appointment of a conservator. Generally, the parents will be appointed as co-conservators in order to manage the settlement funds and file an annual report with the Court. It is this issue that has created confusion and the false belief that if the settlement is less than $10,000, probate approval is unnecessary. To the contrary, the $10,000 threshold is relevant to the issue of whether to appoint a conservator. It does not apply to the issue of settling and extinguishing a minor’s personal injury claim. The settlement terms of the minor’s claim, no matter the amount, must be approved by the court to extinguish the claim.
- Generally, the cost of probate approval will be in the range of $3,500. Obviously, the more complicated the legal issues and factual circumstances will have an impact on the total cost. Most of the time the insurance carrier will agree to bear the costs of the probate procedure. This does not include Plaintiff’s counsel’s attorney’s fees. The issue of who will pay the probate costs should be discussed with Plaintiff’s counsel during the settlement negotiations.
- The Court will usually require that the net settlement funds be placed into a restricted, federally insured banking institution (i.e., bank, credit union. etc.) until the child reaches the age of 21 years. However, prior to the minor attaining the age of 21, the parents or conservator can motion the Court to withdraw a specific amount from the settlement proceeds (i.e., payment of tuition; purchase school related equipment; computers; purchase of a reasonable automobile for transportation to school or work). For good cause the Court will usually grant the motion and permit the withdrawal. The Court will not permit a withdrawal of the minor’s settlement proceeds for family vacations, extravagant purchases, or things required by law to be provided by the parents such as (food, clothing, and shelter).
- If a structured settlement is involved, Courts will generally not allow periodic payments to be made beyond more than a year or two following the minor’s 21st birthday (i.e., payments made at 25, 35, and 45 years of age not typically permitted). An exception can be made by the Court for things such as necessary future life care assistance. If periodic payments are made before the minor reaches 21 years, the payment is usually required to be placed into a restricted account until the minor reaches 21 years or further Court Order.
- When negotiating the settlement of a minor’s personal injury claim, keep in mind that all terms and conditions should be brought up during the negotiation process such as confidentiality, hold harmless and indemnity provisions; who is going to pay the liens; whether probate approval will be insisted upon and how the probate costs will be paid. Failure to include a term before finalizing the agreement may result in either no meeting of the minds and therefore no agreement, or the Claimant may request an additional amount for additional terms to be added.
Please feel free to call me or send an email to discuss any questions or issues you may have. I can be reached at 303-296-2828 and by email at email@example.com.
Michael J. Daugherty, Esq.
WHITE AND STEELE, P.C.