Settlement Approvals for Children With a “Friendly Suit”

Any attorney who has handled injury cases with someone under the age of 18 knows that a friendly suit needs to be filed – even to approve a settlement (if it exceeds $1,000). The statute that applies is 12 O.S. § 83.

The Friendly Suit: A Closer Look at 12 O.S. § 83

When a settlement exceeds $1,000, a friendly suit is often required to obtain court approval. Here’s what the statute entails:

• Investment of Funds: Recovered funds exceeding $1,000 must be securely invested or deposited, subject to court approval.
• Withdrawal Protocol: Court orders are necessary for any withdrawals until the minor turns 18.
• Non-Representation: If a non-represented person applies for withdrawal, the judge is responsible for preparing the order.
• Guardianship: If a legal guardian is appointed before any award, this section does not apply. Guardians appointed after an award can request fund transfers under court-approved safeguards.

The Oklahoma Statutory Thresholds for Settlements Involving Minors Act of 2022 (12 O.S. § 86.1) has introduced provisions that simplify the process for certain cases. Guardians and legal professionals must understand these updates and their implications for minors involved in personal injury claims.

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Streamlined Settlements for Minors: The 2022 Statute

The 2022 update to Oklahoma law provides a more efficient approach for resolving minor injury claims under $25,000. Here’s a breakdown of the key points:

• Legal Custody and Settlements: A person with legal custody may settle on behalf of a minor without a conservator or guardian under specific conditions.
• Settlement Cap: The settlement amount must not exceed $25,000, excluding legal fees and costs.
• Fund Protection: Settlement funds must be placed into protected accounts or annuities.
• Compensation Verification: The custodian must confirm that the minor’s compensation is complete.

Attorneys must maintain an affidavit regarding the minor’s compensation for two years after adulthood.

Handling of Funds:

• Represented minors: Funds are initially placed in an attorney trust account, then moved to a federally insured account in the minor’s name.
• Unrepresented minors: Funds go directly into a federally insured account in the minor’s name.
• Annuities: Payments are made directly to the annuity company, with the minor as the beneficiary.
• State wards: Funds are deposited into a trust account that accrues interest for the minor.

Withdrawal Restrictions:

• Court order
• Minor reaching age 18
• Minor’s death

If these guidelines are followed, the settlement is legally binding without court approval, and good faith actors are protected from liability.

It’s worth noting that some insurers may still require a “friendly suit by affidavit,” which means court approval may be necessary.

Lawsuit Questions for Children Under The Age of 18 (What to Expect at the Hearing to Approve the Settlement)

1. Please state your name for the record.
2. Mr/Ms .X, did you bring suit against Defendants individually and as a parent and next friend of MINOR for personal injuries occurring on or about the (Date), as outlined in Plaintiff’s Petition filed today, docket no. _, District Court of Oklahoma County, State of Oklahoma.
3. Would you state for the record your relationship to MINOR?
4. Are you the custodial parent of MINOR?
5. What is MINOR’S birthday? How old is s/he today?
6. Would you please briefly describe the incident that resulted in this litigation?
7. Sir, are you represented by an attorney in this matter? You have had an opportunity to seek legal counsel. Is that correct? And you have decided not to seek legal counsel in this lawsuit. Is that correct?
8. Please briefly describe what injuries MINOR suffered due to the incident.
9. Were there any other injuries that you’re aware of?
10. Is MINOR continuing to have any medical problems due to this incident?
11. We are here today to settle MINOR’S case against the Defendants, correct? And is it your understanding of the settlement terms that the Defendant and his insurer will pay $$$$$$ to you individually and as a parent and next friend of MINOR, correct?
12. You understand that the $$$$$ is all the money that the Defendants and their insurer will pay you and MINOR as a result of the incident, correct?
13. Have you determined where to put the money that will not be paid to cover past expenses resulting from the incident? (Is that a federally insured banking, credit union, savings and loan institution, or trust department of a banking institution?)
14. Are you voluntarily entering into this settlement agreement today? Are you aware of any fraud, compulsion, duress, or undue influence causing you to accept this settlement?
15. Do you believe it is in the best interest of _____ to settle this case in accordance with the terms we’ve just outlined?
16. Do you understand that you would be entitled to a jury trial if you did not settle this case?
17. Do you understand that a jury could award you more, less, or no money at trial?
18. Do you also understand that you are giving up the right to a jury trial by settling this case?
19. Do you understand that by accepting this settlement today, any existing injury to MINOR and any injury that may arise or develop in the future would not be compensable or recoverable from either the Defendants or their insurer?
20. Based on all we’ve outlined in the record today before the Court, do you still want the Judge to approve this settlement?

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Settlements for Minors FAQS

What is a Friendly Suit?

A friendly suit is a legal action taken to secure court approval for a minor’s injury claim settlement. This step ensures the settlement is in the minor’s best interest, considering their current and future needs.

Who Can File a Friendly Suit?

A parent, legal guardian, or guardian ad litem can file a friendly suit on behalf of a minor to protect the minor’s interests during legal proceedings.

What Happens to the Settlement Funds?

Settlement funds for a minor are placed in protected accounts or structured settlements, with access regulated by the court to ensure the minor’s financial security.

Why is Court Approval Necessary for Minor Settlements?

Court approval is required to confirm the settlement is fair and provides adequate compensation for the minor’s injuries, safeguarding their long-term interests.

Can Minors Directly Receive Settlement Funds?

No, minors cannot directly receive settlement funds. The funds must be placed in a protected account or structured settlement to ensure their financial security.

What is a Structured Settlement?

A structured settlement is a financial arrangement where the settlement amount is paid out over time, offering the injured party a consistent income and long-term financial security.

How Are Settlement Funds Protected?

Funds are protected through court-approved accounts or investments, ensuring they benefit the minor and are available for their future needs.

What Role Does an Attorney Play in Minor Settlements?

Attorneys negotiate settlement, represent the minor’s interests, and guide the guardian through the court approval process, ensuring compliance with legal standards.

Are There Tax Implications for Minor Settlements?

Yes, tax implications may arise, and it’s advisable to consult with a tax professional or attorney to understand and plan for any tax responsibilities.

How Long Does the Friendly Suit Process Take?

The time frame for the friendly suit process varies, depending on the case’s complexity and the court’s schedule. It can range from several weeks to months. The most common is 30 days after the motion is filed.