A “compromise of a minor’s claim” is when parents and legal guardians enter into an out-of-court settlement on behalf of their minor children. This is necessary because a minor cannot be a party to a binding contract in Nevada.
Compromises of minors’ claims are governed by section 41.200 of the Nevada Revised Statutes. Under NRS 41.200, a compromise of a minor’s claims is not legally binding unless and until approved by the district court in:
- The county in which the minor resides, or
- If the minor is not a resident of Nevada, in the county where the claim was incurred.
In this article, our Las Vegas personal injury lawyers will discuss how to compromise a minor’s claim in Nevada.
- 1. Overview
- 2. Plaintiffs
- 3. Procedure
- 4. Petition
- 5. Who gets the money?
- 6. Blocked Trusts
- 7. Reporting Obligations
- 8. Obtaining Money
- Frequently Asked Questions
- Additional Resources
1. Overview
Compromise of a minor’s claim is a legal term referring to the settlement of a disputed claim for money by or on behalf of an unemancipated minor under the age of 18.
Examples of disputed claims for money include:
- Compensatory damages for injuries sustained in a Las Vegas car accident;
- Medical bills resulting from a traumatic brain injury incurred while playing football;
- Medical bills and costs of replacing equipment damaged in a bicycle accident;
- Lost wages from a summer job your teen cannot do after a slip-and-fall accident at a Las Vegas arcade.
2. Plaintiffs
A minor cannot legally be a party to a contract in Nevada.
However, Nevada law provides for certain types of agreements to become legally binding if a court of competent jurisdiction approves them. Such agreements include out-of-court settlement agreements (“compromises”) with a minor.
The compromise agreement must be entered into on behalf of the minor by:
- Either parent (if the parents live together),
- The custodial parent (if the parents are living separate and apart and custody has been awarded),
- The parent with whom the minor is living (if no custody award has been made), or
- The general guardian or guardian of the estate of the minor (if one has been appointed).1
3. Procedure
A minor’s compromise must be approved
- by the district court in the county where the minor resides or
- if the minor resides outside of Nevada, by the county district court where the accident or injury occurred.
A written petition to the court must set forth the following:
- The name, age and residence of the minor;
- The circumstances which make the claim a disputed claim for money;
- The name of the third person against whom the claim is made;
- If the claim is the result of an accident, the date, place and facts of the accident;
- The names and residence of the parents or the legal guardian of the minor;
- The name and residence of the person or persons having physical custody or control of the minor;
- The name and residence of the petitioner and the relationship of the petitioner to the minor;
- The total amount of the proceeds of the proposed compromise and the apportionment of those proceeds, including the amount to be used for attorney’s fees, medical expenses and any other expenses;
- Whether such fees and expenses are to be deducted before or after the calculation of any contingency fee paid to the lawyer;
- Whether the petitioner believes the acceptance of this compromise is in the best interest of the minor; and
- That the petitioner has been advised and understands that acceptance of the compromise will bar the minor from seeking further relief from the third person offering the compromise.2
4. Petition
If the claim involves a personal injury suffered by the minor, all relevant medical and healthcare records must be submitted to the court at or before the compromise hearing.
The records must include documentation of the following:
- The injury, prognosis, treatment and progress of recovery of the minor;
- The amount of medical expenses incurred to date,
- The nature and amount of medical expenses paid and to whom;
- What amount, if any, is owed for medical expenses incurred; and
- An estimate of the medical expenses that may be incurred in the future.3
A “compromise of a minor’s claim” is necessary because minors cannot enter into legal contracts themselves.
5. Who gets the money?
If the court approves the compromise of the claim of the minor, the court must either:
- Direct the money to be paid to the father, mother or guardian of the minor, with or without the filing of a bond, or
- Require a general guardian or guardian ad litem to be appointed and the money paid to the guardian or guardian ad litem, with or without a bond.4
The court will choose whichever option it deems, in its discretion, to be in the best interests of the minor.
6. Blocked Trusts
Upon receiving the proceeds of the compromise, the parent or guardian to whom the proceeds are ordered to be paid must establish a blocked financial investment for the benefit of the minor.
By Nevada law, for purposes of a compromise of a minor’s claim, a “blocked financial investment” consists of:
- A savings account established in a depository institution in Nevada,
- A certificate of deposit,
- A United States savings bond,
- A fixed or variable annuity contract, or
- Another reliable investment that is approved by the court.
Note that the court will generally only require the funds to be placed into a blocked financial investment if the minor’s net settlement proceeds exceed $2,500.5
7. Reporting Obligations
Within 30 days of receiving the compromise proceeds, the parent or guardian shall file with the court proof that the blocked financial investment has been established.
If the balance of the investment is more than $10,000, the parent, guardian or person in charge of managing the investment shall annually file with the court a verified report detailing the activities of the investment during the previous 12 months.
If the balance of the investment is $10,000 or less, the court may order the parent, guardian or person in charge of managing the investment to file such periodic verified reports as the court deems appropriate.
The court may hold a hearing on a verified report only if it deems a hearing necessary to receive an explanation of the activities of the investment.6
8. Obtaining Money
The beneficiary of a blocked financial investment may obtain control of or money from the investment:
- By an order of the court which held the compromise hearing; or
- By certification of the court, which held the compromise hearing, that the beneficiary has reached the age of 18 years.
At such time, control of the investment must be transferred to the beneficiary or the investment must be closed and the money distributed to the beneficiary.7
Child compromise beneficiaries receive the money upon turning age 18.
Frequently Asked Questions
Do all minor settlements require court approval in Nevada?
Yes. Under Nevada law (NRS 41.200), a minor under the age of 18 does not have the legal capacity to sign a binding settlement agreement or release of liability.
Therefore, any personal injury settlement involving a minor must be formally approved by a district court judge through a “minor’s compromise” hearing to ensure the settlement is fair and in the child’s best interest.
Can parents spend a child’s personal injury settlement in Nevada?
No, parents cannot freely access or spend their child’s settlement money. The court requires the funds to be placed into a blocked financial account.
A parent or guardian can only withdraw funds before the child turns 18 if they petition the court and prove the money will be used for the direct, specific benefit of the child (such as specialized medical care or education). The court will not approve withdrawals for basic parental obligations like standard food, clothing, or shelter.
When can a minor access their settlement money in Nevada?
The funds in the blocked trust account become fully available to the minor when they reach the age of majority, which is 18 years old in Nevada. Once the child turns 18, they can petition the court or present their birth certificate and identification to the financial institution to have the block removed and gain unrestricted access to the funds.
What is a minor’s compromise hearing like?
A minor’s compromise hearing is typically a brief, straightforward proceeding before a judge. The judge will review the petition, the medical records, and the settlement terms. They may ask the parents or guardians a few questions to confirm they understand the settlement is final and that the money must be placed in a blocked account.
Depending on the child’s age and the judge’s preference, the minor may also need to attend.
What happens to the medical bills from the minor’s injury?
Before any settlement money is deposited into the minor’s blocked account, all outstanding medical liens and bills related to the injury must be paid. The petition submitted to the court must include a detailed accounting of the total settlement amount, the attorney’s fees, the medical expenses to be paid from the settlement, and the final net amount that will go into the child’s blocked account.
Additional Resources
For more in-depth information, refer to these scholarly articles:
- The Theory of the Waiver Scale: An Argument Why Parents Should Be Able to Waive Their Children’s Tort Liability Claims – University of San Francisco Law Review.
- Parental Control of a Minor’s Right to Sue in Federal Court – University of Chicago Law Review.
- The Tort Duty of Parents to Protect Minor Children – Villanova Law Review.
- Who are You to Say What My Best Interest is–Minors Due Process Rights When Admitted by Parents for Inpatient Mental Health Treatment – Washington Law Review.