387.278 Settlement agreement by person with legal custody of minor -- Affidavit or
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/ky/387-278A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
verified statement -- Payment -- Withdrawal or transfer from account -- Effect
of agreement -- Liability -- Filing for guardianship or conservatorship -- Use of
a restricted savings or other restricted investment account or issuance of
annuity by financial institutions permitted.
(1)A person having legal custody of a minor may settle or compromise and enter into a
settlement agreement with a person against whom the minor has a claim or from
whom the minor is to receive proceeds from the sale of real estate, for the
settlement of any estate, or from any other source if:
(a)A guardian or conservator has not been appointed for the minor;
(b)The total amount of the settlement proceeds due to the minor, after reduction
from the total settlement amount of all medical expenses, medical liens, all
other liens, and reasonable attorney fees and costs, is twenty-five thousand
dollars ($25,000) or less if paid in cash, by draft or check, by direct deposit, or
by the purchase of a premium for an annuity;
(c)The moneys payable under the settlement agreement will be paid as provided
in subsections
(3)and
(4)of this section; and
(d)The person entering into the settlement agreement on behalf of the minor
completes an affidavit or verified statement that attests that the person:
1. Has made a reasonable inquiry and that to the best of the person's
knowledge:
a. The minor will be fully compensated by the settlement; or
b. There is no practical way to obtain additional amounts from the
party or parties entering into the settlement agreement with the
minor; and
2. Understands and acknowledges that he or she is obligated by law to
deposit the settlement directly into a restricted savings or other restricted
investment account, or purchase an annuity, as provided in subsection
(3)of this section.
(2)The attorney representing the person entering into the settlement agreement on
behalf of the minor, if any, shall maintain the affidavit or verified statement
completed under subsection (1)(d) of this section in the attorney's file for a period
of five
(5)years.
(3)The moneys payable under the settlement agreement shall be paid as follows:
(a)If the minor or person entering into the settlement agreement on behalf of the
minor is represented by an attorney and the settlement is paid in cash, by draft
or check, or by direct deposit into the attorney's trust account maintained
under Rule 3.830 of the Supreme Court of Kentucky to be held for the benefit
of the minor, the attorney shall:
1. Timely deposit the moneys received on behalf of the minor directly into
a restricted savings or other restricted investment account that only
allows withdrawals from the account under any of the circumstances set
forth in subsection
(4)of this section; or
2. Purchase an annuity by direct payment to the issuer of the annuity with
the minor designated as the sole beneficiary of the annuity;
(b)If the minor or person entering into the settlement agreement on behalf of the
minor is not represented by an attorney and the settlement is paid by check,
draft, or direct deposit, the minor or person entering into the settlement
agreement on behalf of the minor shall provide the person or entity with
whom the minor has settled the claim with the information sufficient to draw
a check or draft made payable, or complete an electronic transfer of settlement
funds:
1. Into a restricted savings or other restricted investment account that only
allows withdrawals from the account under any of the circumstances set
forth in subsection
(4)of this section; or
2. To purchase an annuity by direct payment to the issuer of the annuity
with the minor designated as the sole beneficiary of the annuity; and
(c)If the minor is under the care, custody, and control of the Commonwealth, the
Cabinet for Health and Family Services shall establish a restricted trust
account, or subaccount of a trust account, that earns interest for the benefit of
the minor, for the purpose of receiving moneys payable to the minor under the
settlement agreement. If the settlement is paid:
1. In cash or by draft or check, the moneys received on behalf of the minor
shall be timely deposited into the account established under this
paragraph, and notice of the deposit to the minor and the person entering
into the settlement agreement on behalf of the minor shall be delivered
by personal service or first-class mail;
2. By direct deposit, the minor, the person entering into the settlement on
behalf of the minor, or the cabinet shall provide the person or entity with
whom the minor has settled the claim with the information sufficient to
complete an electronic transfer of settlement funds into the account
established under this paragraph, and notice of the deposit to the minor
and the person entering into the settlement agreement on behalf of the
minor shall be delivered by personal service or first-class mail; or
3. Through the purchase of an annuity, direct payment shall be made to the
issuer of the annuity with the minor designated as the sole beneficiary of
the annuity.
(4)The moneys in the minor's restricted savings or other restricted investment account,
trust account, or trust subaccount established under subsection
(3)of this section
may not be withdrawn, removed, paid out, or transferred to any person, including
the minor, except as follows:
(a)Pursuant to court order;
(b)Upon the minor attaining the age of majority or being otherwise emancipated;
or
(c)Upon the minor's death.
(5)A signed settlement agreement entered into on behalf of the minor in compliance
with subsection
(1)of this section:
(a)Is binding on the minor without the need for court approval or review;
(b)Has the same force and effect as if the minor were a competent adult entering
into the settlement agreement; and
(c)Shall serve to fully release all claims of the minor encompassed by the
settlement agreement.
(a)As used in this subsection, "financial institution" means any person doing
business under the laws of any state or commonwealth or the United States
relating to banks, bank holding companies, savings banks, savings and loan
associations, trust companies, or credit unions.
(b)A financial institution or other entity may open a restricted savings or other
restricted investment account, or issue an annuity, pursuant to this section.
(c)If a financial institution or other entity elects to open a restricted savings or
other restricted investment account, or issue an annuity, pursuant to this
section, a court order shall not be required to open the account or issue the
annuity.
(d)A person that elects to deposit or otherwise direct moneys into a restricted
savings or other restricted investment account in accordance with subsection
(3)of this section may execute documents to open and administer the account.
(7)A restricted savings or other restricted investment account that is opened and
administered pursuant to this section shall be exempt from the provisions of KRS
Chapter 393A until the earlier of one
(1)of the circumstances set forth in subsection
(4)of this section.
(a)Any person or entity against whom a minor has a claim that settles the claim
with the minor in good faith under this section shall not be liable to the minor
for any claims arising from the settlement of the claim.
(b)An insurer who in good faith transfers funds at the direction of the settling
minor or the minor's representatives into a restricted savings or other
restricted investment account, or to purchase an annuity, shall not be liable to
the minor or the minor's representatives for any claims arising from the use of
those funds after the transfer is completed.
(9)Nothing in this section shall prevent anyone acting on behalf of the minor from
filing for guardianship, limited guardianship, or conservatorship in the District
Court and requesting the District Court to approve the settlement on behalf of the
minor and oversee the settlement proceeds.