The key is the “net settlement.” It is the gross settlement minus attorney’s fees and expenses, enforceable liens, money the child will receive after reaching adulthood, and money placed in a court-approved trust. Used well, they can keep the net settlement at $25,000 or less, which keeps a conservatorship out of your family’s life.
In Part I, I explained when Georgia law requires a judge to approve a child’s injury settlement, and when it requires a conservatorship. I described a few ways to keep the court’s role small: a structured settlement, apportioning the money among injured family members, and prepaying future medical care.
I ended that post by saying other strategies exist. This post covers several of them.
A quick refresher on the rules, under O.C.G.A. § 29-3-3:
- Gross settlement of $25,000 or less: a natural guardian, usually a parent, can settle without a judge and without a conservator.
- Gross settlement over $25,000, but net settlement of $25,000 or less: a judge must approve the settlement, but no conservator is needed.
- Net settlement over $25,000: a judge must approve the settlement, and a conservator must be appointed to receive the money.
The key is the “net settlement.” Most of what follows is about lawful ways to lower it.
What the law lets you subtract
In 2022 the legislature rewrote the settlement statute. Each of those is a tool. Used well, they can keep the net settlement at $25,000 or less.
In 2022 the legislature rewrote the settlement statute. It now defines the “net settlement” as the gross settlement minus:
- attorney’s fees and the expenses of the case;
- liens that are legally enforceable against the settlement;
- the present value of money the child will receive after reaching adulthood; and
- the present value of money placed in a trust for the child that the court approves or creates.
Each of those is a tool. Used well, they can keep the net settlement at $25,000 or less, which keeps a conservatorship out of your family’s life.
Strategy 1: Pay the child later, on purpose
Money that will be paid to your child after the child becomes an adult is subtracted from the net settlement. A structured settlement does not have to be all or nothing.
Money that will be paid to your child after the child becomes an adult is subtracted from the net settlement. That is the statutory basis for the structured settlement I described in Part I.
A structured settlement does not have to be all or nothing. Many families structure most of the money to begin at 18, and take a smaller amount now, sized to stay at or under the $25,000 net threshold. Payments can be timed for college years, a first car, or a down payment on a home.
Strategy 2: Put the money in a court-approved trust
Money placed in a trust for the child’s benefit, approved or created by the court, is also subtracted from the net settlement. If a lawsuit is pending, the judge in that case can approve the settlement and order the money paid directly into the trust.
This is the most important change from 2022. Money placed in a trust for the child’s benefit, approved or created by the court, is also subtracted from the net settlement.
If a lawsuit is pending, the judge in that case can approve the settlement and order the money paid directly into the trust. In my reading of the statute, when the money goes straight from the insurer into the trust, no conservatorship is required, because the parent never receives it. Not every court reads it the same way, so this should be raised early, before the settlement terms are final.
A trust is often a better fit than a conservatorship. The trustee follows the trust’s terms, not a stream of court filings. For a child with a lasting disability, a special needs trust can also protect eligibility for Medicaid and other benefits.
Strategy 3: Settle the parents’ claim separately, and honestly
The parents’ claim does not need a judge’s approval. The split has to follow the real losses.
When a child is hurt, there are usually two claims: the child’s claim, and the parents’ claim for medical expenses and the loss of the child’s services. I explained the difference in Your Child’s Claim and Your Claim.
The parents’ claim does not need a judge’s approval. A settlement that allocates the medical bills you paid to your own claim, in the written settlement agreement, can lower the child’s share.
The word that matters is honestly. The split has to follow the real losses. A judge reviewing the child’s settlement will ask how the money was divided, and an allocation that shortchanges the child will not hold up.
Strategy 4: Resolve the liens before you sign
A lien that is legally enforceable against the settlement is subtracted from the net settlement. Negotiate the liens down first.
Health insurance plans, hospitals, and Medicaid often claim repayment from the settlement. A lien that is legally enforceable against the settlement is subtracted from the net settlement.
That cuts both ways. Every dollar that goes to a lienholder is a dollar your child does not get. Negotiate the liens down first, and know the final numbers before the settlement is presented for approval.
Strategy 5: Choose the right court
If no lawsuit has been filed, the petition goes to the probate court. If a lawsuit is pending, the court where it is pending has exclusive jurisdiction to approve the settlement.
If no lawsuit has been filed, the petition to approve the settlement goes to the probate court. If a lawsuit is pending, the court where it is pending has exclusive jurisdiction to approve the settlement.
That choice matters. A trial judge who has lived with the case already knows the injuries, the evidence, and the risks, and can approve a settlement that pays directly into a trust. Sometimes filing suit before settling is the faster road to a clean result, not the slower one.
What none of this avoids
If the gross settlement is more than $25,000, a judge still has to approve it before it binds your child. That rule protects families.
These strategies shrink the court’s role. They do not remove the safety net, and they should not.
If the gross settlement is more than $25,000, a judge still has to approve it before it binds your child. That rule protects families.
And whatever the amount, a parent who receives a child’s money has a legal and moral obligation to hold and use it for the child’s benefit. O.C.G.A. § 29-3-1(b).
Remember, too, that the insurance company has to agree to the structure of the settlement. Annuities, trusts, and allocations all have to be negotiated. Raise them early, before the numbers are final.
What I tell parents
Do not agree to a number until you know how it will be paid. Ask about a trust or a structured settlement if the net amount will be over $25,000.
- Do not agree to a number until you know how it will be paid. The structure can matter as much as the amount.
- Get the lien amounts in writing before the settlement is presented to a court.
- Ask about a trust or a structured settlement if the net amount will be over $25,000.
- Keep your own claim separate, and document the medical bills you paid.
- Do not sign a release until someone has checked how it affects every claim your family has.
The goal is not to hide anything from a judge. The goal is a settlement that protects your child without putting your family under years of court reporting it does not need.
Attorney Pete Pearson has practiced personal injury law in Georgia since 1996. He has a special interest in helping families of injured children. He is a father of ten and lives with his wife and children in Newborn, Georgia.
If you need to talk, my direct line is Six-Seven-Eight 358-2564, or email pete@petepearsonlaw.com.