In North Carolina, a judge must approve any settlement of a minor’s personal injury claim. You (through a guardian ad litem) file a short lawsuit or motion asking the court to approve the settlement, present proof of fairness, address medical liens and attorney’s fees, and propose how the funds will be safeguarded. The judge decides if the deal is in the child’s best interest and orders where the money goes (for example, a restricted account, deposit with the Clerk, a structured annuity, or a guardian of the estate). The Clerk oversees withdrawals from funds it holds and releases them to the child at 18 unless the court orders a different lawful arrangement.
Minors cannot legally settle their own injury claims. A court must review and approve any compromise to protect the child. The minor appears in court through a guardian ad litem (often a parent or another adult the court appoints). The judge’s job is to confirm the settlement is fair, the fees and costs are reasonable, all liens are handled correctly, and the net funds will be safeguarded until the child is an adult. If the case is already in court, the presiding judge can approve it. If no lawsuit exists, you file a short, uncontested “friendly” civil action to request approval.
Courts also decide how to hold the child’s money. Common options are: (1) deposit with the Clerk of Superior Court (often used for amounts up to $50,000, with the Clerk managing investment and later withdrawals); (2) a restricted bank account or certificate of deposit payable only by court order; (3) a structured settlement annuity that pays in the future; or (4) appointing a guardian of the estate to manage larger or more complex funds, subject to bond and court accountings. If the Clerk holds funds, withdrawals before age 18 are limited and must be for the child’s necessities, with receipts.
Guardian ad litem and filings: The minor must appear through a guardian ad litem under the civil rules. File a verified petition or motion asking the court to approve the settlement and appoint the guardian ad litem if one has not already been appointed.
Evidence to support approval: Provide the settlement terms; liability facts; injury summary and recovery status; medical bills and records; proof of any health insurance or Medicaid/medical provider liens; and the attorney-fee agreement and itemized costs. Judges often require affidavits from the parent/guardian ad litem and counsel explaining why the settlement is fair.
Liens and allocations: North Carolina recognizes statutory medical-provider and hospital liens on personal injury settlements. The court will expect a plan to pay valid liens within statutory limits and to separate any parent’s claim (for medical expenses) from the child’s claim (for pain, suffering, impairment, etc.).
Safeguarding the funds: For amounts commonly up to $50,000, courts frequently order deposit with the Clerk of Superior Court, who will invest and later release funds. For larger sums, courts may approve a structured annuity, appoint a guardian of the estate, or order deposit into a restricted account. If the Clerk holds funds, any early withdrawal must be for the child’s needs (for example, medical or education), and the requester must provide receipts.
Payee instructions: Settlement checks are typically made payable pursuant to the court’s order (for example, “Clerk of Superior Court for the benefit of [Minor]” or “Guardian of the Estate of [Minor]”). Checks should not be made payable directly to a parent unless the order allows it.
Open or identify the court file. If a lawsuit is pending, your attorney files a motion for approval in that case. If not, your attorney files a short “friendly” civil action asking the court to approve the settlement.
Appoint a guardian ad litem. The court appoints a competent adult (often a parent or another adult) to act for the child in the proceeding.
Submit the approval packet. This usually includes: verified petition; proposed order; settlement agreement and release; medical bills, liens, and payments plan; affidavits from the guardian ad litem and counsel; attorney-fee and costs request; and a proposal for how to hold the funds (Clerk deposit, restricted account, annuity, or guardian of the estate).
Hearing. The judge reviews the evidence, may ask questions, and determines if the settlement is in the child’s best interest. The judge also sets how the funds will be safeguarded and who can receive disbursements.
Funding and deposit. The insurer issues payment per the order. If deposited with the Clerk, the Clerk invests the funds and controls early disbursements. If a guardian of the estate is appointed, that guardian takes possession and follows court rules for bonding and annual accountings. Structured annuity payments are set up to pay in the future as ordered.
After-approval oversight. If the Clerk holds funds, any early withdrawal requires a written request and proof the expense is a necessity for the child, with receipts. When the child turns 18 (or as the order otherwise lawfully provides), remaining funds are released.
N.C. Gen. Stat. § 1-402: A judgment or compromise affecting a minor is not valid until approved by a judge. This is why court approval is required.
N.C. Gen. Stat. § 1A-1, Rule 17: Minors must appear in civil actions through a guardian ad litem or proper representative. Courts appoint a guardian ad litem in approval proceedings.
N.C. Gen. Stat. § 7A-111: The Clerk of Superior Court may receive and administer certain funds for minors (commonly used for personal injury settlements up to $50,000 per source), and early withdrawals require proof they are for the child’s necessities, with receipts.
N.C. Gen. Stat. § 7A-112: Directs how the Clerk deposits and invests funds received by virtue of the office, including minor settlement funds held by the Clerk.
N.C. Gen. Stat. § 35A-1252: Describes powers and duties of a guardian of the estate or general guardian of a minor, including taking possession of the minor’s property when a guardian is appointed for larger or ongoing management needs.
N.C. Gen. Stat. § 44-49 and § 44-50: Create and regulate health care provider and hospital liens on personal injury settlements and cap how much of a recovery can go to those liens after attorney’s fees and costs.
N.C. Gen. Stat. § 108A-57: Sets Medicaid’s reimbursement rights from liability settlements, which must be addressed before the court approves the net distribution.
Don’t skip court approval: A private release signed by a parent will not bind a minor. You need a judge’s order approving the settlement.
Conflicts of interest: A parent may have a separate claim for medical expenses. The court may appoint a guardian ad litem and can scrutinize any allocation between the parent’s claim and the child’s claim.
Using the Clerk vs. guardianship: The Clerk can typically hold per-source funds up to $50,000 for a minor and control early withdrawals. Larger or more complex recoveries often require a structured annuity or a guardian of the estate with bond and accountings.
Withdrawals before 18: If the Clerk holds the funds, early withdrawals must be for the child’s necessities and need receipts. Courts rarely allow spending for general household expenses.
Liens and subrogation: Failing to identify and satisfy valid liens (medical providers, Medicaid) can delay approval or put the guardian ad litem at risk. Bring lien letters and a clear payoff plan.
Payee errors: Issuing checks to a parent individually can cause problems. Follow the court’s payee instructions precisely.
Local practice varies: Which judge hears the request and how funds are safeguarded can vary by county. Follow local rules and the judge’s directives.
If you’re resolving a child’s injury claim and need court approval, our firm can guide you through the filings, hearing, liens, and how to safeguard the funds. Call us today at 919-313-2737.
Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney–client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.
