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A Major Change for Minor Settlements

On Behalf of | Sep 21, 2021 | Firm News

On August 28, 2021, the State of Missouri put into effect the “Missouri Statutory Thresholds for Settlements Involving Minors Act.” This Act impacts the way that minor settlements are handled in the State of Missouri.  Most importantly, court approval is no longer needed if a minor’s legal custodian executes an affidavit and the minor’s settlement is less than thirty-five thousand dollars ($35,000.00).

Missouri’s new law, R.S.Mo. § 436.700, governs minor settlements when the total amount of the claim, which includes reimbursement of medical expenses, liens, reasonable attorney’s fees, and costs, is thirty-five thousand ($35,000.00) dollars or less if paid in cash, by draft, or if paid by the purchase of a premium for an annuity.

Under Missouri law, a person is unable to enter into contracts unless they are over eighteen (18) years of age, which includes contracts, such as settlement agreements releasing liability.  Thus, to allow settlements involving minors, Missouri enacted laws which required court approval and management of settlement agreements and distribution of settlement proceeds for and to minors. While these procedures were beneficial to protecting minors, these requirements and proceedings are costly to all parties involved.

If the settlement falls within the provisions of R.S.Mo. § 436.700, it is no longer necessary to petition a court and conduct a hearing for approval of the minor’s settlement before a Judge.  The procedure has been simplified to allow a minor’s legal custodian to enter into a settlement agreement on behalf of the minor so long as they complete an affidavit or verified statement that attests that the minor’s legal custodian has made a “reasonable inquiry” and that: (a) To the best of the [legal custodian’s] knowledge, the minor will be fully compensated by the settlement; or (b) There is no practical way to obtain additional amounts from the person or entity entering into the settlement agreement with the minor.

If the minor settlement is encompassed within the Act, then the settlement agreement can be signed by the minor’s legal custodian on the minor’s behalf without further court approval. In addition to governing the procedure for approval, The Act governs how the settlement proceeds should be handled.  Each case is different and should be evaluated independently.

Any settlement proceeds paid into a special account as described in the Act, has restrictions.  These proceeds can only be accessed when ordered by a court, when the minor is eighteen (18) years old, at the direction of a duly appointed conservator or the custodian for the uniform transfer to minors account for the sole benefit of the minor, or upon the minor’s death.

The Act will streamline how minor claimants and carriers can settle claims within the $35,000.00 threshold without requiring court intervention and approval. These changes will be more efficient and cost effective, in addition to expediting the process and will benefit all parties.