Parent's Guide to Child Injury Settlements

The Bottom Line

When a child is injured in a car accident in NC, the legal process is fundamentally different from an adult claim. NC requires court approval for any settlement involving a minor. The money does not go to the parents -- it is deposited into a blocked account or trust that the child cannot access until they turn 18. A guardian ad litem may be appointed to ensure the settlement serves the child's interests, not the parents'. Parents also have their own separate claim for medical expenses they paid and loss of the child's services. Understanding this process protects both your child's rights and your own.

Filing the Claim: The "Next Friend" Role

A child under 18 cannot file a lawsuit or insurance claim on their own behalf in NC. Instead, a parent or legal guardian files the claim as the child's "next friend" -- a legal term meaning the adult who represents the minor's interests in court.

Who can serve as next friend:

• A biological or adoptive parent
• A legal guardian appointed by the court
• In some cases, another adult with a sufficient relationship to the child

The next friend files the claim, communicates with the attorney, makes decisions about litigation strategy, and negotiates with the insurance company. But the next friend does not own the claim -- the claim belongs to the child, and any settlement must be approved by the court to ensure it serves the child's interest.

Court Approval: Required for Every Minor's Settlement

In NC, no settlement involving a minor is final until a judge approves it. This requirement exists because children cannot legally consent to settling their own claims, and the court acts as a safeguard to prevent parents or attorneys from accepting settlements that undervalue the child's injuries.

The approval process:

1. The attorney files a petition with the NC Superior Court requesting approval of the proposed settlement
2. The petition includes details about the accident, the child's injuries, medical treatment, the settlement amount, and the proposed distribution
3. The court may appoint a guardian ad litem (GAL) to independently evaluate whether the settlement is fair
4. A hearing is held where the judge reviews the terms
5. If the judge determines the settlement is fair and in the child's best interest, the judge issues an order approving it

What the judge considers:

• Is the settlement amount reasonable given the child's injuries?
• Are the attorney fees appropriate?
• Does the proposed distribution protect the child's funds?
• Are there any conflicts of interest between the parents and the child?

Guardian Ad Litem

The court may appoint a guardian ad litem (GAL) -- an independent person who represents the child's interests separately from the parents and the attorney.

When a GAL is appointed:

• When there is a potential conflict between the parents' interests and the child's interests (for example, if the parent was the driver in the accident)
• When the settlement amount is substantial
• When the court wants an independent evaluation of the settlement terms
• As a routine practice in some NC judicial districts

What the GAL does:

• Reviews the medical records and accident details
• May interview the child, the parents, and the treating physicians
• Evaluates whether the proposed settlement adequately compensates the child
• Files a report with the court recommending approval or rejection of the settlement
• May recommend modifications to the settlement terms

The GAL's fee is typically paid from the settlement proceeds as an additional expense.

Where the Money Goes: Blocked Accounts and Trusts

If the court approves the settlement, the child's portion does not go to the parents. NC courts require the funds to be placed into a protected account that the child cannot access until they reach the age of majority (18 in NC):

Blocked Bank Account

The most common arrangement for moderate settlements. The funds are deposited into a bank account that requires a court order to withdraw from. The account is in the child's name, and the bank is instructed not to release funds without court authorization.

Trust

For larger settlements, the court may order the funds placed into a formal trust with a designated trustee. The trustee manages the funds, invests them conservatively, and distributes them according to the court's order -- typically when the child turns 18 or 21.

Structured Settlement

For significant settlements, a structured settlement may be appropriate. Instead of a lump sum, the settlement is converted into an annuity that makes scheduled payments -- often starting when the child turns 18 or 21. Structured settlements for children offer:

• Tax-free growth -- the annuity earnings are not taxed
• Protection from impulsive spending -- the child receives payments over time, not a lump sum on their 18th birthday
• Guaranteed income -- payments are backed by the annuity company

Parents Cannot Spend the Child's Settlement

This point cannot be overstated: the child's settlement money belongs to the child. Parents cannot:

• Withdraw funds to pay household bills
• Use the money for their own medical expenses
• Spend it on family vacations or purchases
• "Borrow" from the account with the intention of paying it back

The court order establishing the blocked account or trust specifically prohibits unauthorized withdrawals. Violating this order can result in contempt of court and other legal consequences.

Limited exceptions: The court can approve withdrawals for the child's direct benefit:

• Necessary medical treatment related to the accident
• Educational expenses
• Therapeutic equipment or services
• Other expenses that directly benefit the child

Each withdrawal requires a separate petition to the court and judicial approval.

What Damages Can a Child Recover?

A child's car accident claim can include:

• Medical bills -- past treatment for accident-related injuries
• Future medical costs -- ongoing treatment, future surgeries, therapy
• Pain and suffering -- the physical pain and emotional distress the child experienced
• Scarring and disfigurement -- permanent scars, visible injuries
• Loss of earning capacity -- if the injuries will affect the child's ability to work as an adult
• Emotional distress -- anxiety, PTSD, fear of cars or travel

Children's claims for pain and suffering and scarring can be substantial because the child will live with the effects of the injuries for decades longer than an adult would.

The Parent's Separate Claim

In addition to the child's claim, parents have their own independent claim for:

Medical expenses paid: If the parents paid medical bills for the child's treatment -- co-pays, deductibles, out-of-pocket costs -- they can recover those amounts in their own claim. This is separate from the child's claim for future medical costs.

Loss of the child's services: Under NC law, parents are entitled to the "services" of their minor children -- meaning the child's contributions to the household. If the child's injuries prevent them from performing normal activities (chores, helping around the house), the parents can claim the value of those lost services.

The parent's recovery goes to the parents, not into the child's blocked account. These are legally distinct claims.

Statute of Limitations for Minors

The standard statute of limitations for personal injury in NC is 3 years from the date of the accident (N.C. Gen. Stat. 1-52). For minors, the clock is tolled -- meaning it does not start running until the child turns 18.

This means a child technically has until age 21 to file a lawsuit for injuries suffered in a car accident.

But do not wait. The tolled statute of limitations is a safety net, not a strategy. Waiting years to file a claim creates serious problems:

• Evidence disappears -- surveillance footage is deleted, vehicles are repaired or scrapped, accident scenes change
• Witnesses forget -- memories fade, witnesses move away, people become harder to locate
• Medical causation weakens -- the longer you wait, the harder it is to prove the injuries were caused by the accident rather than something else
• Insurance policies lapse -- the at-fault driver's policy at the time of the accident is what matters, but locating old policy information becomes harder over time

File the claim as soon as possible. The tolled statute of limitations exists for situations where a child's parents are unable or unwilling to file -- not as a reason to delay.

Frequently Asked Questions

Can parents spend their child's settlement money in NC?▾

No. A child's settlement funds belong to the child, not the parents. NC courts require settlement funds for minors to be deposited into a blocked account or trust that the child cannot access until they turn 18. Parents cannot withdraw or spend these funds on household expenses, bills, or personal items. The court may authorize limited withdrawals for the child's direct benefit -- such as necessary medical treatment or educational expenses -- but only with court approval.

How long does a parent have to file a car accident claim for a child in NC?▾

The standard statute of limitations for personal injury in NC is 3 years. For minors, the clock is generally tolled -- it does not start running until the child turns 18. This means a child technically has until age 21 to file a lawsuit. However, waiting is strongly discouraged. Evidence disappears, witnesses forget details, and medical records become harder to connect to the accident. File the claim as soon as possible after the accident.

What is a guardian ad litem in a child injury case?▾

A guardian ad litem (GAL) is a person appointed by the court to represent the child's interests independently of the parents. The GAL investigates the case and the proposed settlement, then reports to the judge on whether the settlement is fair and in the child's best interest. The court may appoint a GAL when there is a potential conflict between the parents' interests and the child's interests, or as a routine matter in minor settlement approvals.

Can parents file their own separate claim when a child is injured in a car accident?▾

Yes. In NC, parents have their own claim for medical expenses they paid on behalf of the child and for loss of the child's services (the child's contributions to the household). This is a separate claim from the child's claim for pain and suffering, future medical costs, and other damages. The parent's claim and the child's claim are typically handled together but are legally distinct -- the parent's recovery goes to the parent, and the child's recovery goes into the child's blocked account.