When is court approval of a minor’s settlement needed to make the settlement binding on the minor?
Short answer: for every minor settlement.
Long answer: there is some judgment involved.
It is a common argument of a plaintiff attorney to argue court approval for a minor settlement under $10,000 is not required. Rule 16.3 of the Arizona Rules of Civil Procedure recently clarified this: “The settlement of a claim brought on behalf of a minor or adult in need of protection is not binding unless a judicial officer approves it as provided in Rule 53 of the Arizona Rules of Probate Procedure.” So, if a personal injury claim or wrongful death claim is involved, it is required.
1. The Settlement Process for Settlements Under $10,000
The process for obtaining approval of a settlement under $10,000 is not straight-forward. If the settlement does not excess $10,000, a full conservatorship is not required. We still recommend them when possible as a conservatorship – the process of a court appointing a conservator (usually a family member) to be responsible for the minor’s money until the minor turns 18 – gives the best protection to the money for the minor and guarantees it will be there when they become an adult. Alternatively, if the case is already in litigation, the parties can file a stipulated motion for court approval explaining the settlement and citing the statutes requiring court approval – this is a quick process.
If the case is not in litigation, the options are trickier. You can try and file a stipulated action in probate court for approval of the settlement, but in our experience, most courts convert the action into a conservatorship. Whether to obtain court approval in those cases with settlements under $10,000 then becomes a judgment call with a cost/benefit analysis. The conservatorship process typically costs around $3,000-$5,000, so if the settlement is for less than that, involves very minor injuries, or involves no injuries and very little treatment, the cost outweighs the benefit. It is also unlikely in those situations the minor will repudiate the settlement when they turn 18. Larger claims and moderate to major injuries dictate the extra protection, especially if the minor’s medical bills are not covered by the settlement, such as in distribution cases.
2. The Settlement Process for Settlements Over $10,000
Minor conservatorships are heard and managed by the Probate Courts in Arizona. The process is pretty much the same in every county, but slightly different forms or something like fiduciary training may be required, depending upon the county. Most counties have forms and instruction packets online and if they do not, the state has their own generic forms.
The process is fairly straight forward: Establish who will act as the conservator (typically a parent or relative of the minor), file a probate cover sheet, petition for court approval of a minor settlement and to appoint a conservator, and affidavit of the petitioner with the court to open the case. Obtain a hearing date. Any parent or guardian who has not had their legal rights cut-off has to have notice of the hearing. If you do not know where they are, publish. If you do and they will cooperate, have them sign a waiver regarding notice for this hearing and all future hearings. Any request for attorney’s fees and costs will also need to be filed prior to the hearing by the requesting attorney.
Next, 10 court days before the hearing, the proposed orders need lodged with the court including the order to conservator and order approving and appointing. If you are in a county that requires fiduciary or conservatorship training, then file proof of training.
Finally, attend the hearing. Any minor over 10 years old should attend as well. The closer they are to 18, the more the Court will want their input on the process. Afterward, obtain orders, have Letters & Acceptance issued by the probate clerk, and then head to the bank (unless you have an annuity, which simplifies the process.) The final action is to file the Proof of Restricted Account with the Probate Clerk.
Conclusion
Rule 16.3 clarifies that court approval is required for all minor settlements. However, sometimes, doing so just does not make sense for that particular settlement. Of course, if the settlement is for $10,000 or more, court approval is mandatory through a conservatorship. The process there is very pleading and procedure heavy, but manageable once you have done it a few times (or dozens of times as we have.)
The attorneys at Thomas Rubin & Kelley are well-versed in civil litigation. If you require any assistance with any of your Arizona claims, please do not hesitate to contact Brian Rubin (brubin@trkfirm.com) or Michael Kelley (mkelley@trkfirm.com).