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Hancock v. Share: Can you create a Structured Settlement for a Minor which pays out Past Age of Majority? Of course you can!

By Jason D. Lazarus, J.D., LL.M., MSCC

Traci Hancock, as mother and natural guardian of Marisa Hancock appealed an order entered by Judge Smith approving, in part, a proposed settlement agreement.  The grounds of the appeal was that the trial court erred in refusing to approve a structured settlement that paid out past age of majority.  The 5th DCA in Florida reversed the Judge’s decision.

In Hancock, Traci Hancock was appointed guardian over the property of an injured minor, Marisa Hancock.  The property of the guardianship was proceeds from a personal injury lawsuit.  Traci Hancock as guardian filed a petition seeking approval of a settlement agreement on behalf of the minor.  The proposed settlement agreement provided for payment to Traci Hancock for services as guardian, to Marisa’s counsel for their services in the personal injury lawsuit and the guardian ship proceedings and to Marisa for her tort damages.  The petition stated that it was in Marisa’s best interest that the lawsuit be settled and that Marisa’s proceeds would be used to purchase “annuity for the benefit of the minor child.”  The proposed structured settlement annuity paid out over a 27 year period.

At the hearing to approve, Judge Smith asked counsel for Marisa whether she would be able to “get her cash out of the annuity when she turns 18” and counsel replied no.  Judge Smith entered an order approving the settlement of the lawsuit but refusing to authorize the purchase of a structured settlement annuity.  The court’s grounds for denying the structured settlement were that the “Guardian of the property has no authority to bind the assets of the ward beyond the age of majority pursuant to Florida Statute 744.441(19).”  Traci Hancock alleged that Judge Smith “erred, as a matter of law, in denying her request to approve the structured port of the settlement agreement.”  The 5th DCA agreed.

In its decision, the 5th DCA found that Judge Smith erred in his conclusion that 744.361(6)(c) required the court to ensure that upon reaching age 18 the ward’s proceeds of her lawsuit would be available to her.  The 5th DCA also found error with Judge Smith’s reliance upon Guardianship of Bernstein v. Miller.  Bernstein involved the creation of irrevocable trusts that didn’t pay out until age 30 for two minor children to manage inheritance from their deceased father.  The 4th DCA struck down the trial court’s creation of the irrevocable trusts because it violated section 744.441(19) of the Florida Statutes which authorizes the creation of irrevocable trusts which extend beyond the disability of the ward only if the trust is created in connection with tax planning.  The 5th DCA in Hancock indicated that since this matter didn’t involve any trust documents, the limitation set forth in 744.441(19) wasn’t an issue.

The 5th DCA found that a trial court is authorized to approve a proposed annuity contract under 744.441(21) provided there is a finding that it is “appropriate for, and in the best interest of, the ward.”  In the instant case, all of the parties and even Judge Smith agreed that the proposed annuity contract was in Marisa’s best interest.   Accordingly, the 5th DCA held it was error by the court to refuse to approve the structured settlement.  While this has always been the common practice, court’s approving structured settlements for minors where the money was paid out post age of majority, some court’s questioned whether there was a legal basis to do so.  Judge Smith in Volusia count was one of those judges and now the 5th DCA has answered the question and put it to bed.

To view the opinion click HERE

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