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Need for Judicial Approval of Settlements for Minors in Personal Injury Cases

For most personal injury cases stemming from automobile accidents, once the injured party – where that party is an adult- reaches agreement with the insurance company covering the other driver, they have the authority to finalize and implement their settlement on their own. Granted, if the case is in litigation, a settlement agreement or consent order may be filed with the Clerk of the relevant court.  But where the injured victim is a minor child, any settlement must be approved by the appropriate court before it may be finalized and funds may be disbursed.


The reason for this practice stems in part from the paternalistic instinct to ensure no one is taking advantage of the child. In a few instances, some unscrupulous parents or guardians may seek to use their own child’s case to their own financial advantage, to the eventual detriment of the child.


Before such a settlement can be so confirmed, a reviewing court is required to assess the tendered personal injury settlement by considering 4 major factors:


 (1) whether the terms of the settlement were fairly and honestly negotiated;

 (2) whether serious questions of law or disputes of fact exist, placing the ultimate outcome of litigation in doubt;

 (3) whether the value of an immediate and swift recovery outweighs the mere possibility of greater future relief; and

(4) whether the settlement is fair and reasonable in its effect.


In federal court, the judge will review the settlement after requesting and reviewing a report from a guardian ad litem. The Guardian ad litem represents the child’s interests only. The court will consider whether the settlement appears to be consistent with other settlements in similar situations and, where satisfied, the court will render its approval. For children who suffer permanent or long-term disability, it may be necessary to establish some form of trust to hold funds until the injured minor reaches adulthood.


The attorneys at Giddens & Gatton Law, P.C. represent individuals in personal injury suits in New Mexico. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the office at (505) 633-6298 to set up an appointment or visit the firm’s website at for more information

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