This year Tennessee amended its law governing minors’ settlements (Tenn. Code Ann. § 29-34-105) to waive court approval unless:
- the settlement is greater than $10,000;
- the minor is unrepresented by local counsel; or
- it involves a structured settlement.
The law sets a firm bar for approval and is consistent with the majority of the state Uniform Transfer to Minor Acts and guardianship statutes. All 50 states have guardianship statutes and nearly all states require court approval for minor settlements in excess of a set amount, typically around $25,000.
Who Protects the Minor Child in a Settlement?
Courts and guardians have long favored structured settlements as being in the best interest of a minor. An appointed guardian’s duty – as opposed to a natural guardian, such as a parent – is to be responsible for the minor’s personal welfare and for personal decision-making on their behalf, including financial decisions such as settlement. The court’s duty is to protect the minor and to approve such compromise of a minor’s settlement but only where the evidence shows that the compromise is in the best interest of the minor.
A decision to take a minor’s settlement in cash – or deposit into an account that becomes their property at the age of majority – may not always be the best decision. Even a small amount can grow to a substantial tax-free future for a child, providing for college and other plans to give them the best start in life.
Why is a Structured Settlement Essential for a Settlement Involving a Minor Child?
While the allure of cash is strong, providing for the child should be paramount. Perhaps Judge Elward said it best when he denied a cash settlement and approved a structured settlement for a minor in the case of Ott v. Little. He said that he could not “let anybody, no matter how well-intentioned or sincere in their convictions, gamble for this child.” Giving a young adult a large sum of money is just that – a gamble they will spend it wisely and make good decisions. My inclination has always been to avoid gambling with a child’s money and choose a structured settlement to give them a secure future.
Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the opinions of Arcadia Settlements Group, its parent company or its affiliates. The opinions expressed herein are based on information publicly available but should not relied upon or construed as legal advice.
By John McCulloch | Structured Settlement Consultant, Vice Chairman
John holds an MBA from the University of Phoenix, a JD from Kaplan University, and a BA in Business from St. Martin’s College. In addition, he has completed graduate studies in Electronic Commerce at the University of San Diego and holds the following professional designations: CSSC, FLMI, WCLS, AIAA, ACS, and CMSS™, as well as an accounting certification from the Department of Defense. His formal insurance training includes casualty, property, fidelity and Workers’ Compensation claims, as well as Life and Health underwriting.
