July 21, 2006

Ask The Lawyer

Grandmother worries about protecting 6-year-old’s settlement money from car accident

This week's question:
I am very concerned about my 6-year-old granddaughter's settlement money. She was in a very bad auto accident several months ago where the other party was clearly at fault. Our son and his wife are separated and if our granddaughter's settlement money gets into the hands of our daughter-in-law the child's money may be lost forever. Is there any way to protect this fund? After expenses, it should be in the high six figures. The insurance company claims representative said something about a “blocked account.”

Keri K.
Almaden Valley

Dear Keri:
Sorry to hear about your granddaughter, Keri, but there is a way to help protect the settlement fund. No one can guarantee that the money will be spent wisely, but the court will do what it can to protect your granddaughter's money. My experience has been that courts are very careful about protecting money that belongs to children.

When the automobile accident is ready to be settled, undoubtedly the insurance company paying the money will require that there be a "minor's compromise" court order approving the settlement. That is a court order signed by the judge after a hearing where the incident is reviewed in some detail and the settlement presumably approved.

As part of the order approving the "minor's compromise," the court will probably sign a fairly typical "Order to Deposit Money Into Blocked Account." This is a court order that includes the following points:

The order states that the money belongs to (name of the child), and that the money shall be deposited in an interest-bearing, federally insured blocked account or accounts.

One of two boxes will be checked. Either (a) or (b). Box (a) states that no withdrawals of principal or interest shall be made from the blocked account or accounts without a written order under the case name and number, signed by a judge, and bearing the seal of the court, and providing that the money is not subject to escheat (i.e., passing to the state after a time).

Box (b) on the next part of the court order states that the blocked account or accounts belong to a minor, and then the minor's date of birth is stated. After that, the order goes on to state that no withdrawals of principal or interest shall be made from the blocked account or accounts without a written order under the case name and number, signed by a judge, and bearing the seal of the court, until the minor attains the age of 18 years. When the minor attains the age of 18 years, the depository, without further order of the court, is authorized and directed to pay the money including interest directly to the former minor.

The final paragraph of the order typically provides that a copy of the order is to be delivered to each depository in which funds are deposited under the order, and that the depository's acknowledgment of receipt of the order and the funds shall be filed with the court within 15 days of deposit.

You can read more about the law governing orders to deposit money into blocked accounts by going to www.findlaw.com. Then head for California state laws, statutes in particular. Then enter Code of Civil Procedure §372 and Probate Code §3600 et seq. Those provisions cover the various rules pertaining to blocked accounts. If you go to a Web site that shows and enables you to download court forms, the form is #MC-355.

As you can see, courts will do what they can to ensure that minor's funds are handled properly. As always, you will want to see your own attorney for a full and balanced review of these provisions as they may apply to your case.
Good luck, Keri. I hope the settlement works out well for your granddaughter.

Donald J. DeVries
Almaden Valley


Donald J. DeVries is an attorney practicing law in Almaden Valley. If you would like him to answer your question in his next Almaden Times column, you can reach him by e-mail at don@almadenvalleylawyers.com, fax at (408) 268-6502, telephone at (408) 268-9500, or mail at, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. To view Almaden Times columns since 1986 visit www.almadenvalleylawyers.com. DeVries writes this column to provide you with general information about important legal matters affecting California residents—not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.