Detailed Answer
Summary: In Delaware, courts protect children by reviewing and approving most personal-injury settlement agreements reached on behalf of a minor. The court’s job is to confirm the settlement is fair, that the minor’s future needs are considered, that attorney fees are reasonable, and that settlement funds are placed or used in a way that protects the minor. Below are the typical steps you will follow and what each step requires.
Step 1 — Retain an attorney experienced with minor settlements
Hire a civil attorney who handles children’s or guardianship-related settlements. The attorney will investigate the claim, calculate current and future damages (medical care, future treatment, lost earnings, pain and suffering), and negotiate with the insurer or defendant.
Step 2 — Negotiation and settlement agreement
Once a settlement amount is reached, the parties prepare a written settlement agreement. Typical terms include the total payment, any structured settlement or annuity details, allocation for past medical bills, attorney fees, and how the remainder will be managed for the child.
Step 3 — Prepare a petition for court approval
The attorney prepares and files a petition (sometimes called a petition to compromise or petition to approve settlement) in the appropriate Delaware court. The petition package usually contains:
- The settlement agreement and proposed final order;
- A sworn statement or affidavit from the child’s legal guardian explaining why the settlement is in the child’s best interest;
- Medical records and bills that support the claim and damages;
- A detailed accounting of how the settlement amount will be allocated (fees, liens, medical bills, net to minor);
- A breakdown and justification for attorney fees and costs; and
- Any additional reports the court may require (for example a guardian ad litem report).
Step 4 — Appointment or report of a guardian ad litem (if required)
If the court thinks it needs an independent view of the child’s best interests, it can appoint a guardian ad litem (GAL). The GAL investigates and files a report or appears at the hearing to recommend approval or modification of the settlement. Sometimes a GAL is required when the child’s interests conflict with the guardian or when future medical needs are complex.
Step 5 — Court review and hearing
The court will schedule a hearing. At the hearing the judge reviews the petition, supporting documents, and any GAL report. The judge will ask questions to confirm the settlement is reasonable, that healthcare and future needs are addressed, that fees are fair, and that any liens (medical providers, insurers) are handled.
The judge may require the minor to attend depending on age and circumstances, but often the judge hears from the guardian, the attorney, and the GAL.
Step 6 — Court order and disposition of funds
If the court approves the settlement, it issues an order that:
- Approves the settlement and the attorney’s fees;
- Directs how to handle liens and medical bills;
- Specifies how the net proceeds are to be managed — common options are a structured settlement, a blocked (restricted) account at a bank, the creation of a conservatorship, or a trust (including a special needs trust if the child is on Medicaid); and
- May require periodic accounting to the court if funds are placed under guardianship or conservatorship.
Step 7 — Implement the court’s order
After entry of the order, the parties follow the approved distribution plan. This can include purchasing an annuity for a structured settlement, sending funds to a blocked bank account (often called a court-ordered or custodial account), or funding a trust. If a conservator or trustee is appointed, they typically must file accountings with the court.
Other common court requirements and issues
- Health-insurance and Medicaid liens: The court often requires verification that liens are identified and resolved.
- Attorney fees: Courts examine contingency fees closely when minors are involved and will reduce fees they find unreasonable.
- Tax considerations: Structured settlements may affect tax treatment; consult an attorney or tax advisor.
- Special-needs children: If the child receives public benefits, the court will favor trust or structured solutions that preserve benefits (e.g., a supplemental needs trust).
Timeline and typical costs
Timeline depends on the court’s calendar and complexity. Simple settlements with minimal future care needs can be approved in a few weeks to a few months. Complex cases with GAL involvement, lien disputes, or conservatorship can take several months. Expect court filing fees, costs for a guardian ad litem (if appointed), and administrative expenses for blocked accounts or annuities.
Practical example (hypothetical)
Example: A 7-year-old is injured in a car crash. The parties agree to a $200,000 settlement. The guardian hires an attorney, who negotiates $40,000 for outstanding medical bills and a $20,000 attorney fee. They file a petition asking the court to approve the settlement, appoint a GAL, place the remaining $140,000 in a blocked account, and require the conservator to submit annual accountings. The court reviews medical records and the GAL report, approves the settlement and fees, and signs the order that directs how the funds are held and spent for the child’s benefit.