New Missouri Statute Eases Requirements for Finalizing Settlements for Minors

The Missouri legislature recently passed SB 295 - the “Missouri Statutory Thresholds for Settlements Involving Minors Act” – easing requirements for finalizing settlements of personal injury and other claims involving minor children.[1] The bill (now codified as Section 436.700, RSMo) was effective August 28, 2021. With the newly enacted statute, claimants and adverse parties can expect to save a lot of time and expense on attorneys’ fees and court costs. The key point is that if certain conditions are met,[2] court approval is no longer required to settle a claim on behalf of a minor if the total amount of the claim—including reimbursement of medical expenses, liens, reasonable attorney’s fees and costs—is equal to or less than $35,000. The new statute further provides that the funds may be deposited directly into a Uniform Transfer to Minor Account for the sole benefit of the minor.

Previous Requirements

Prior to the statute’s enactment, the settlement of any claim involving a minor, regardless of the amount, required court approval. Moreover, if the minor was scheduled to receive more than $10,000, the claimant was required to post a bond, purchase an annuity, or set up a conservatorship to protect and oversee the disbursement of the settlement funds. Often referred to as “friendly lawsuits,” the parties were required to file a petition in the appropriate circuit court, asking that the court approve the settlement in the best interests of the minor claimant. This meant paying a filing fee to initiate the proceedings as well as other fees and costs associated with drafting and filing the proper pleadings: 1) a Petition for Approval of the Minor Settlement; 2) a Petition for the Appointment of a Next Friend to act as the minor’s representative for the proceedings;[3] 3) a Consent to Serve as Next Friend form, signed by the minor’s guardian or representative; 4) a Proposed Order for the judge to sign appointing the Next Friend; 5) a Proposed Order for the judge to sign approving the settlement; and 6) the appropriate Satisfaction of Judgment and/or Stipulation for Dismissal that was filed once the settlement funds had been paid.

In addition to drafting and filing these documents, the parties needed to set a hearing for the court to hear evidence that the proposed settlement agreement was in fact in the best interests of the minor. At the hearing, the minor’s duly appointed Next Friend (usually a parent or guardian) gave brief testimony regarding when the settlement funds were to be used and for what purposes, what liens were to be paid from the settlement funds, and that the claim was being settled with the understanding that the Next Friend, on the minor’s behalf, waived his or her right to a jury trial for any claims that may have arisen from the subject occurrence. The hearing itself was very straightforward and typically lasted less than 30 minutes.[4]

Altered Practices

The practical reality is that, even before the newly enacted statute, the formalities required for finalizing a minor settlement had largely been altered due to the COVID-19 pandemic. At the height of the pandemic, many circuits in Missouri began to approve minor settlements without a hearing, instead requiring only the filing of an affidavit signed by the Next Friend. The parties would also file a memorandum with the court stating that all parties consented to evidence being adduced by affidavit. In the circuits that still preferred to hold a settlement hearing, the availability of virtual dockets on platforms like Zoom and Webex helped courts to adjudicate minor settlements as efficiently as possible without putting any of the parties or their attorneys at risk of contracting or spreading COVID-19.  Many judges did not require the Next Friend to appear virtually, instead allowing the claimant’s attorney to simply read the Next Friend’s affidavit into the record. Still, the requirement of a virtual settlement hearing meant the further incurring of fees and expenses.

The Takeaway

Even with courts adapting to a more virtual docket, the new statute provides a less costly and burdensome procedure for the settling of claims involving minors. Claimants and insurance carriers will save time and money by not needing to prepare pleadings or attend a settlement approval hearing. Instead, the only documents that need to be drafted and signed are a release and an affidavit of the person having legal custody over the minor. The courts and their staff, in turn, can direct more time and attention to other matters on their dockets, which will be especially helpful right now given the current backlog of stalled trials and evidentiary hearings caused by the pandemic. Importantly, the new statute maintains appropriate safeguards to ensure that the settlement terms and disbursement of funds remain in the best interests of the minor. It also promotes judicial economy. The new statute, therefore, presents a welcome change in procedure to all parties involved in settling claims that involve minor claimants.

[1] A minor is any person under 18 years of age. See § 507.115, RSMo.

[2] Among other things, the new statute requires the person entering into the settlement on behalf of the minor to execute an affidavit providing either that he/she believes the settlement will fully compensate the minor or that there is no practical way to obtain additional amounts from the person/entity entering into the settlement agreement with the minor.

[3] See § 507.184, RSMo, et seq.

[4] The procedure described in this paragraph and in the preceding paragraph will still apply to settlements for minors greater than $35,000.

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Kerri Forsythe

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