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When a minor child is involved in a personal injury settlement, New York rules provide safeguards to protect the child’s legal and financial interests. New York Civil Practice Law and Rules Section 1207 imposes special procedural requirements for these settlements, including a judicial approval of the settlement of an action brought on behalf of an injured child. These procedures are designed to protect children from the unexpected consequences of receiving a potentially large financial compensation payment before they are mature enough to handle it themselves. 

In certain circumstances, the funds may be required to be placed into a structured settlement, such as an annuity, for the benefit of the child after he or she reaches adulthood.  As one judge noted, “Structuring of a settlement enables the settlement recipient to receive secure tax-free income over a course of years or a lifetime to provide for future medical care, education, etc., and, in this way, the proceeds from an award are not dissipated or lost by individuals unaccustomed to managing large sums.” Roman v. Bermudes, 832 N.Y.S.2d 770 (N.Y. Sup. Ct. 2007).

Another way courts ensure the injured child’s best interests are being represented in the settlement is by limiting the number of people who are able to act on behalf of the minor to approve a settlement. These people include guardians, parents having legal custody, anyone else with legal custody, or an adult spouse residing with the child. Based on a motion (or request) filed by one of the above-named people, the court may by order approve a settlement. For the court to approve a settlement of such a claim, the proposed terms must be determined to be fair and reasonable, as well as in the infant's best interests.

There have been past attempts to settle claims involving an injured child outside of court, however even if a formal lawsuit hasn’t been commenced, court approval may still be required in most situations. As another court held,  an “Agreement to settle an infant’s claim for personal injuries is unenforceable without court’s approval regardless of whether or not an action has been commenced, and an agreement executed by father of infant to indemnify one against damage resulting from settling infant’s claim without court approval is equally unenforceable.” Valdimer v. Mt. Vernon Hebrew Camps, Inc., 9 A.D.2d 900 (N.Y. App. Div. 2d Dep't 1959).

In these types of situations, it is crucial to have an experienced attorney who is advocating for the best interests of your child, and who is diligent and experienced in getting the child the compensation they deserve. Although this standard of excellence should be expected of attorneys, as case law demonstrates it is not always true. There are reported cases in which courts have rejected settlement proposals or have found others unenforceable for a variety of reasons, emphasizing why choosing the right personal injury attorney is so important.

If you or a loved one has sustained a serious injury, an experienced personal injury attorney can help. It is important to consult with a lawyer early to investigate your options and preserve crucial evidence.  For assistance with these matters, please contact us to learn more.

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About the author: Peter J. Gregory is a partner with MCCM Personal Injury Lawyers in Rochester NY.  He is a trial lawyer with extensive experience resolving disputes in state and federal trial courts. As a personal injury lawyer, Gregory focuses on advising clients who have been injured or lost loved ones in accidents caused by the carelessness or recklessness of others. Please feel free to contact him directly at pgregory@mccmlaw.com or (585) 512-3506.

This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.