When a child suffers an injury as a result of another's carelessness, the child has a viable injury claim. However, Oregon and Washington law consider children to be "disabled," but only in the legal sense. In other words, because a child is not legally able to pursue a claim, and to enter into any agreement with the lawyer or an insurance company, special rules apply on how these claims are pursued.
In Oregon, the law requires that a parent or another responsible adult be appointed as a conservator. A person is appointed as a conservator or by petitioning the court for permission. There are special requirements for people to be qualified to act as a conservator. In a traditional conservatorship, special responsibilities are imposed on the conservator, which generally require the conservator to act in the best interest of the child. If there is any recovery on behalf of the child, the conservator is required to manage the funds in the best interest of the child. The conservator must obtain court approval of any settlement, and must account for the management of funds on an annual basis. In some cases, the conservator must be bonded to protect the child's assets. Even on a local level, different courts throughout Oregon have different requirements on approving settlements for children, and management of settlement funds.
In Washington, courts require approval of the settlement of the children's injury claim. However, the procedure works somewhat differently. In Washington, the responsible parent must petition the court for the appointment of a "guardian ad litem." This person is somebody qualified to evaluate whether or not the settlement is in the best interest of the child. The guardian ad litem has no interest in the case, and will report to the court as to whether the terms of the settlement are reasonable. Sometimes, the guardian ad litem may make recommendations as to the management of settlement funds.
Regardless of whether a case is resolved in Oregon or Washington, structured settlements are often employed to manage the funds in the best interest of the child. A structured settlement usually takes the form of an annuity, which is an insurance contract. With an annuity, the responsible parent or adult agrees to a direct transfer of settlement funds from the responsible insurance company to another insurance company that provides the annuity. The annuity sets out a schedule of periodic payments over time to the child. Typically, payments are deferred until the child reaches adulthood. Because the insurance company is "holding on" to the bulk of the settlement funds, those funds earn interest, and the periodic payments over time will exceed the original value of the annuity. In some cases, the earnings on an annuity are exempt from income tax. There may be some cases where disbursements are made prior to the child reaching adulthood, depending upon the child's needs.
Both states have enacted these laws so that the child's best interest are first and foremost. Unfortunately, there are some sad stories where conservators and even parents have taken advantage of settlements and recoveries made for injured children, and these laws seek to prevent the misuse of funds.
When we represent a child in injury claim, we will often work with the responsible parent or individual to get the conservatorship established, appoint a guardian ad litem if necessary, and work with a reputable structured settlement broker to make sure that the annuity is in the child's best interest. We can sometimes structure the settlement so that a conservator in Oregon is not required to file annual reports.
If you have a child who is dealing with an injury claim, call us with your questions at 503-325-8600. We can explain your options, and let you know where you stand.