Minor’s Compromise – Do You Really Need One In Nevada Or Can I Skip It?

Nevada Revised Statute 41.200 addresses minor’s compromises.  This statute applies to unemancipated minors who have a disputed claim for money against a third person.  NRS 41.200 (2) provides the general requirements that must be included in the Petition for a Minor’s Compromise.  If the claim involves personal injuries, then NRS 41.200 (3) includes additional items that must be included in the Petition.

Under NRS 41.200 (7), there is no fee for filing the Petition or for any hearings required as part of the Petition.  The Petition should be filed in the County where the minor resides, or if the minor is not a resident of Nevada, the County where the claim occurred.

The three most frequently asked questions regarding settling claims of minors are (1) when a minor’s compromise is needed; (2) whether there is a minimum dollar amount before one is required to be filed; and (3) what happens if the case settles pre-litigation and there is no attorney.

First, there is no minimum dollar amount to require a minor’s compromise.  It is required for all matters with a minor where there is a settlement.  Without a Petition being filed and approved by the Court, there is no settlement that is valid and enforceable.  Remember that the statute of limitations on claims is tolled until a minor reaches age 18.  So, if a settlement is reached where there is no approved Petition, there is a risk that the minor can assert claims later when he turns 18.

Attorneys often hear “stories” of settlements for small amounts where someone claims that there is no need for a minor’s compromise.  This is not true.  It is always required.  Do not be fooled or deceived by someone else that one is not needed or that you have a valid settlement of a minor without the Court’s approval and necessary paperwork and blocked trust account.

Remember, the minor is not representing himself.  There is another person acting on his behalf and settling the minor’s claims.  Often the minor is too young to provide consent or even understand the legal process.  The Court’s role is to protect the minor, ensure the settlement is appropriate based on the facts and evidence, and ensure the necessary medical bills are paid, liens are resolved, and the money is available later for the minor.

Although it seems hard to believe, there have been cases where the parents of a minor settle a claim and ask for the money for themselves or for reasons that would not benefit the minor child.  The purpose of the blocked account is to ensure the money is there for the minor child when he turns 18.  In some instances, the minor can petition the Court to gain access to the money for necessary medical expenses, but that is on a case-by-case and judge-by-judge basis.  The general rule is that the money is untouchable until the minor is 18.  This is designed to protect the minor’s interests.

If a matter settles pre-litigation and there is no counsel, the insurance carrier can retain counsel for the sole purpose of filing the Petition and obtaining the necessary Court approval.  The Petition will include information regarding the medical damages, incident, medical bills, liens, lien reductions, amounts owed, and the balance to the minor.  The Petition creates a case number so a judge is assigned to the matter.  In an ongoing case, there is already a judge assigned and the Petition is simply filed within the pending case.

Once the Petition is complete, the parent or guardian can open a blocked trust account.  The order on the Petition can also establish that someone else can open the approved account, but only certain banks allow a non-parent to open such an account.  After the account is open, the check is deposited, and proof is provided to the Court.

If the balance of the investment is more than $10,000, then NRS 41.200 (5) requires the guardian or person in charge of managing the account to annually file a report of the account activity for the prior year.  If the amount is less, the Court has discretion to order periodic reports regarding the account.  To avoid any concerns that such an obligation is owed by the insurance carrier or counsel retained solely to obtain the Court’s approval, it is good practice to send a letter to the parent or guardian noting the statutory obligation and noting that counsel and the insurance carrier are not undertaking any such obligation.

Although the cost of filing a Petition, obtaining the Court order, opening the account, and ensuring the liens are resolved may seem unnecessary (particularly if the procedure costs more than the amount of the settlement), it is not.  If, for instance, the liens go unpaid for years and accrue interest, it can create a significant liability.  Or, the minor could turn 18 and elect to sue with a much higher damage claim.  Without the minor’s compromise, there is a risk of exposure.  Complying with NRS 41.200 allows the defendant and insurance carrier to know that the matter has resolved and that there is finality to the settlement. This is the prudent path to avoid issues later.