Minor’s Compromise in California: What Parents Need to Know About Court-Approved Settlements
If your child was injured in an accident and you’re working toward a settlement, you need to understand that minors cannot legally settle their own cases in California. The law requires a special court process called a minor’s compromise to protect children from settlements that might not serve their best interests. This isn’t a formality—it’s a mandatory legal requirement designed to make sure your child’s compensation is preserved for their future.
At William D. Shapiro Law, Inc., our personal injury lawyers in Orange County have been fighting for Southern California families for decades. When you meet with one of our Santa Ana attorneys, we’ll explain how the minor compromise process works and how to help your child through this process. Understanding these rules now will help you avoid delays and ensure your child receives the full financial protection they deserve. Call us at 909-890-1000 now.
Why California Requires a Guardian Ad Litem
Your child cannot sign settlement documents or make legal decisions about their case. California law requires an adult, known as a Guardian Ad Litem (GAL), to act on behalf of the minor throughout the settlement process. This person steps into the legal role of representing your child’s interests in negotiations and in court.
The Guardian Ad Litem has one job: to act solely in the best interest of the child. They review settlement offers, work with your attorney, and ultimately ask the court to approve the proposed settlement. The court must formally approve the Guardian Ad Litem before they can act in this capacity.
Who Can Be a Guardian Ad Litem
In most cases, a parent serves as the Guardian Ad Litem. However, California law requires that this person be completely uninterested in the case. This means that they cannot receive any money from the same settlement. The reason a Guardian Ad Litem exists is to eliminate conflicts of interest. The Guardian Ad Litem must focus entirely on what’s best for the child without considering their own financial recovery.
If both parents were injured in the same accident and are also settling claims, neither parent can serve as the GAL. In this situation, the court would appoint someone else, such as a relative or trusted family friend, to fill this role.
The Minor’s Compromise Petition
Once you and your attorney reach a settlement agreement, the Guardian Ad Litem must file a formal petition with the court requesting approval. This document is called a Minor’s Compromise Petition, and it provides the judge with complete transparency about the settlement.
The petition includes specific information:
- The exact settlement amount the minor will receive
- A breakdown of any attorney’s fees and costs
- Where the settlement funds will be deposited
- Whether the funds will be placed in a blocked bank account or used to purchase a structured settlement annuity
The court reviews this petition carefully. A judge will examine whether the settlement amount is fair given the nature and extent of the child’s injuries, the strength of the case, and the costs of continuing litigation. The judge may ask questions, request additional information, or even reject a settlement if it appears inadequate.
This court review is your child’s protection. Unlike adult settlements that parties can finalize privately, every minor’s settlement must pass judicial scrutiny.
Where the Settlement Money Goes
California law doesn’t allow parents to simply receive their child’s settlement check and deposit it into a regular bank account. The state requires specific protections to ensure the funds remain available when the child reaches adulthood.
Blocked Bank Accounts
If your child receives a settlement, the money goes into an FDIC-insured bank account that’s blocked until they turn 18. A blocked account means no one can touch the money without getting permission from a judge first. The bank won’t let anyone withdraw funds until your child becomes an adult.
This keeps the settlement safe. Once your child turns 18, the account opens up and the money is theirs to use.
Structured Settlement Annuities
In some cases, the Guardian Ad Litem may propose purchasing a structured settlement annuity instead of depositing cash into a blocked account. An annuity provides periodic payments to the child over time, often starting when they turn 18 or at other specified ages. This option can offer tax advantages and provide a guaranteed income, but it requires careful consideration and court approval.
Accessing Funds Before Age 18
The blocked account rule is strict. However, California courts do recognize that sometimes families need early access to these settlement funds. The Guardian Ad Litem can file a petition requesting permission to withdraw money, but the court will only grant these requests in limited situations.
Acceptable reasons for early withdrawal typically include:
- Medical care that is directly related to the injuries from the accident
- Extraordinary expenses that resulted from the injury, such as specialized equipment or home modifications
- Educational expenses that specifically benefit the minor’s recovery or development
When requesting access to a child’s settlement money, you must provide documentation showing why the expense is necessary and how it benefits the child. Routine living expenses, family bills, or general costs of raising a child do not qualify. The court’s priority is preserving the settlement for the child’s future needs, so a judge will look closely at the petition before ultimately making a decision.
Parents Cannot Access the Funds
This point deserves emphasis: parents do not have legal access to their child’s settlement money. Even if you served as the Guardian Ad Litem during the settlement process, your role ends once the court approves the compromise and the funds are deposited. The judge oversees the entire process to ensure the money remains protected for the child.
This restriction exists because settlement funds compensate the child for their injuries, pain, suffering, and future damages. These funds belong to the minor, not to the family unit. California law recognizes that children need this protection to ensure their compensation remains available when they’re old enough to manage it themselves.
Working With an Injury Law Firm in Orange County
The minor’s compromise process involves detailed legal filings, court appearances, and strict compliance with California law. Most parents handling their child’s injury claim work with a lawyer who handles personal injury cases and understands the minor’s compromise requirements.
At William D. Shapiro, Inc., our injury attorneys in Orange County will prepare the petition, communicate with the court, and guide you through each step of the approval process. We’ll also help you understand your options for depositing the funds and answer questions about accessing money if extraordinary needs arise before your child turns 18.
Call William D. Shapiro Law, Inc. at 909-890-1000 to talk about what happened or fill out our confidential contact form.
William Shapiro has handled catastrophic injury/wrongful death actions for over 4 decades obtaining numerous seven and eight-figure verdicts and settlements. Honors include: 2022, 2016 and 2013 OCTLA “Top Gun” TLY; 2022 CAOC TLY Finalist; 2018 “Lifetime Achievement Award” Western State College of Law, 2021 & 2017 Best Lawyers, Lawyer of the Year; 2016 WSBCBA “TLY”; 2015 CAL-ABOTA “TLY”; 2014 “TLY” Consumer Attorneys of CAOIE; 2011 “Hall of Fame,” Western State College of Law; Fellow, American College of Trial Lawyers; International Academy of Trial Lawyers; International Society of Barristers; Diplomat, American Board of Trial Advocates (ABOTA); National Board of Trial Advocacy; specialist in Trial Advocacy, State Bar of California; “Best Lawyers in America” and “Tier 1 Best Law Firms” U.S. News; AV Preeminent, Martindale-Hubbell; SuperLawyers; Past President of: San Bernardino/Riverside chapter ABOTA; San Bernardino County Bar Association; Consumer Attorneys of Inland Empire; The Joseph. B. Campbell American Inn of Court; Consumer Attorneys of California; IE ; National Sec of ABOTA, Adjunct professor, Western State College of Law. Learn more here.