The State of Maryland protects minors. In lawsuits, the State has established rules to help ensure that children (age 18 and under) who receive money, by settlement, have protection against misuse of those funds.
First, if the minor is receiving less than $5,000 (not including attorneys’ fees or costs), the check may be made out to the child’s legal guardian. Typically this will be written something like “Hester Prynne, mother and natural guardian of Pearl Prynne-Dimmesdale.” The parent may deposit the check in their bank account without any special arrangements, and may use the money as they see fit for the child’s benefit.
If the minor receives $5,000 or more (again, exclusive of attorneys’ fees and costs), the State has decided that special protections must be observed. There, the check would read like this: “Hester Prynne, trustee under Title 13 of the Estates and Trusts Article, Annotated Code of Maryland, for Pearl Prynne-Dimmesdale, minor.” The trustee is anyone who will be responsible for the money–there is no other court paperwork required to create a trustee. That check must be deposited into an account set aside for the child–it cannot be deposited into the parent’s or trustee’s account. The money must be held in the interest-bearing account until the child turns 18, at which point the child gets sole access to it.
It’s useful to note that, when calculating whether the minor’s net recovery is $5,000 or more, the attorney should usually deduct the medical expenses. Under Maryland law, medical expenses usually belong to the child’s parents (there are some exceptions).
Of course, a court may require other procedures, including appointment of a guardian. It’s not likely that a court would get involved when a case settles without a lawsuit, however.
The laws are found in the Estates and Trusts section of the Maryland Code at 13-403. The complete text of the section is below.
Estates & Trusts § 13-403 provides:
(a) Payment by check to trustee – In general: Unless a court appoints a guardian of the property of a minor under subsection (c) of this section, if a minor or any other person in whose name a claim in tort is made or judgment in tort obtained on behalf of a minor recovers a net sum of $5,000 or more, the person responsible for the payment of the money shall make payment by check made to the order of ” [name of trustee], trustee under Title 13 of the Estates and Trusts Article, Annotated Code of Maryland, for [name of minor], minor”.
(b) Payment by check to trustee – No other act necessary- No other act is necessary to constitute the person named a trustee.
(c) Appointment of guardian – In general.-
- In accordance with the procedures for the appointment of a guardian under Subtitle 2 of this title, the court may appoint a guardian of the property of a minor on whose behalf a recovery in tort is sought or has been obtained if the court determines that the appointment would be in the minor’s best interest.
- The petition for guardianship may be made by an interested person or a trustee under this subtitle.
(d) Appointment of guardian – Payment by check: If a court appoints a guardian of the property of a minor under subsection (c) of this section and the minor or any other person in whose name a claim in tort is made or judgment in tort obtained on behalf of the minor recovers a net sum of $5,000 or more, the person responsible for the payment of the money shall make payment by check made to the order of “[name of guardian], guardian under Title 13, Subtitle 2 of the Estates and Trusts Article, Annotated Code of Maryland, for [name of minor], minor”.