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Kentucky Law Changes to Make it Easier for Minor to Make Auto Accident Claim?

Matt Troutman May 10, 2023

Beginning in April of 2022, Kentucky law changed to make it easier for a minor to achieve a settlement in an auto accident claim. If the settlement is for $25,000.00 or less, no longer is the parent or guardian for the minor required to obtain court approval of the settlement and file annual reports with the court. The parent or guardian is still required to place the settlement proceeds in a blocked account until the child reaches 18 years of age and no withdrawals can be made without court approval.

Prior to the enactment of KRS 387.278, there was always confusion about whether the statute required court approval of settlements $10,000.00 or under. It was my interpretation that court approval was not required for a settlement under $10,000.00, but there were insurance companies and judges that disagreed with me. Now, this statute removes this confusion and raises the cut-off amount to $25,000.00.

The new law is important because the process of obtaining probate court approval delays the settlement process and adds to the work of the attorney and client. The attorney has to prepare complicated paperwork to file with the probate court (and each court seemed to require different paperwork) and then the client has to file annual reports documenting the current status of the monies in the blocked account. A lot of paperwork and hassle for a small settlement always seemed ridiculous and discouraged attorneys from handling small claims by minors.

When determining the cut-off of $25,000.00, the new statute says that this figure is the net settlement to the minor and not the gross recovery, which is another point of confusion in the earlier statute. When there is a personal injury settlement, the client must pay the attorney’s contingency fee, costs and any health liens or other liens against the settlement. With the new statute, it is clear that the cut-off of $25,000.00 is the net amount that the minor is to receive out of the settlement.

Like the old statute, the new one requires the parent or guardian and the attorney for them to place the net settlement funds in a blocked account or annuity where withdrawals are only allowed by order of the court. The attorney is required to have the parent or guardian sign an affidavit or verified statement acknowledging that the parent or guardian is satisfied with the settlement and is obligated to maintain the money in the blocked account until the minor is 18 years of age.

The signed settlement agreement entered by the parent or guardian is binding on the minor. And the estate cannot be distributed unless the court orders it, the minor turns 18 years of age or the minor dies.

The last part of the new statute allows the attorney or insurance company to file for approval of the settlement as required by the previous statute. It is possible that despite the new law, some insurance companies will require that the claim go through probate court approval. The reason for this is that they may not trust the lawyer or parent to obey the law without court supervision. I had insurance companies requires the probate approval in the past when the settlement was under $10,000.00 and the statute did not seem to require court approval.

Contact Kentucky Auto Accident Attorney Matthew Troutman

The circumstances in a minor’s auto accident claim will require the services of an experienced Kentucky auto accident attorney to investigate the cause of the accident and maximize all benefits available to the victims and their families. Matthew Troutman, a Kentucky auto accident lawyer, of the Troutman Law Office has been handling auto accident claims, almost exclusively, since 1986 and has the experience and talent to obtain the best result for the victims in the above car accident.

If you need legal assistance due to a motor vehicle accident, contact Kentucky auto accident attorney Matthew Troutman directly at 859-696-0001 or 502-648-9507 and he will meet with you in the hospital, your home or wherever is convenient for you. He will give you direct access through his cell phone and guide you through the difficult process necessary to obtain the best result possible for you in your car accident claim. To learn more about Kentucky car accident attorney Matthew Troutman and the Troutman Law Office, click here.