April 23, 2018
Is the child with the parents or one parent? Parents may resent the fact that you want someone else to handle the money. It could also hurt the parents’ relationship.
A parent can receive the funds under the uniform transfers to minors act. Iowa Code chapter 565B. Whether you do a conservatorship is really going to be a judgment call based on 1) the amount of money you’re talking about, 2) the trustworthiness of the parent who would be custodian and 3) whether the party paying the funds (insurance company) insists on a conservatorship.
It will be required if you end up obtaining more than $25,000 for the minor. One argument against waiting to incur the expense is because you could lose on liability.
I believe the most common interpretation of the statutes, rules and cases (i.e. Sec. 633.574, R1.210 and Galloway v. State, 790, N.W.2d 252) is that if the settlement exceeds $25k, you will need court approval. The easiest way to obtain this approval is via a conservatorship. If you structure the settlement, you can close the conservatorship once the court approves of the settlement and the apportionment of damages between parent/child. There would be no assets to oversee during the age of minority. If you don’t structure, it will have to be left open and will require reports and such.
You must have a conservatorship if the settlement is over $25,000. Iowa Code § 633.574; see also Iowa Code § 565B.7(3) (stating if a custodian has not been nominated, or all persons nominated to serve as custodians are unable, unwilling or ineligible to serve, a transfer may be made to an adult member of the minor’s family unless the property exceeds $25,000 in value). Generally, a parent has no right, in the absence of authorization from a court, to release or compromise causes of action belonging to a minor. Galloway v. State, 790 N.W.2d 252 (Iowa 2010).
Don’t forget that the parents hold the claim for past medical expenses, and they are subject to the two year statute of limitations. Grinnell Mut. Reinsurance Co. v. Recker,561 N.W.2d 63 (lowa 1997).
You can also create a special needs trust. I don’t know the first thing about creating one, but I currently have a client who has a special needs trust set up for settlement money he was awarded after he sustained an injury several years ago. My understanding is that it’s basically the same thing as a conservatorship, except you have trustees making the decisions about how money is used- and in my client’s case, monies in the trust are only to be used for his special needs- which were a result of the accident.
I can’t advise which would be better in your particular situation, as my understanding is limited, but I thought I’d throw it out there as another option you may want to consider.
I am handling a sizeable personal injury claim arising from severe injuries to a child. It seems to me that having a conservatorship for the child established might be a prudent step. Does anyone have any thoughts as to whether this is a required step or if there is any reason not to go through the time and expenses of a conservatorship? Many thanks.
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