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2008-07-23-02

The Supreme Court of South Carolina

Re: Revised Minor Settlement Procedure


ADMINISTRATIVE ORDER


I find that Title 62, Article 5, Part 4 (Protection of Property of Persons Under Disability and Minors) of the South Carolina Code of Laws outlines the Minor Settlement Procedure.

I further find that, pursuant to § 62-5-433 of the South Carolina Code of Laws, the attached Minor Settlement Procedure shall be used as a guideline for the basic statutory definitions and procedures for the settlement of claims in favor of or against minors or incapacitated persons.

It is ordered that the Order of this Court dated October 27, 1992 providing for a uniform Minor Settlement Procedure is superseded and the Minor Settlement Procedure is amended as summarized below:

SECTION I. AMOUNT OF CLAIM DETERMINES JURISDICTION

The jurisdictional amounts were updated pursuant to § 62-5-433. The amount of the claim for when the Circuit Court has exclusive jurisdiction has been changed from $10,000 to $25,000. Circuit and Probate Courts have concurrent jurisdiction for claim amounts under $25,000. Provisions were added to the “Note: Appointment of a Conservator” to include the following language: “When a conservator is to be appointed, the Conservator must be appointed by the Probate Court pursuant to § 62-5-402.” The Note also includes wording that states, “Additionally, when a structured settlement is over $10,000, but the minor will not receive more than $10,000 per year during his or her minority, it is generally not appropriate to appoint a conservator. Absent extraordinary circumstances, it is not appropriate to appoint a conservator when the minor will not receive any funds under a structured settlement until after the minor reaches adulthood.”

In addition to the above revisions, minor changes to this section were made to the language in an effort to clarify the procedure.

SECTION II. INITIATION OF PROCEEDING

The language “for claims over $25,000” was added to Item F which now states “Commentary of best interest of the minor for claims over $25,000.”

The language regarding the order and its requirements (H. Proposed Order) has been separated from the provisions of the verified petition and “H. Proposed Order” has been rewritten to state “Order must contain (§ 62-5-433(B)(2) and (3):.” Further, the requirements of the order are now organized by letters instead of numbers.

To provide clarification, Letter C. (formerly number 3) has been rewritten to state “If net amount is over $10,000, require that payment be made through the conservator or, if no conservator has been appointed, through the clerk of court until a conservator is appointed.” Letter D (formerly number 4) added “net amount” to the beginning of the provision so that the sentence now reads, “If net amount is under $10,000 and a conservator exists, require payment to conservator and notice to the Probate Court which appointed conservator, or if no conservator, require that payment be made in accordance with § 62-5-103.”

SECTION III. ATTORNEY

The last sentence of this section was rewritten to include “attorney’s” in the sentence, so that it now reads “The court may approve a reasonable attorney’s fee to be paid from the settlement proceeds.”

SECTION IV. BOND

The word “generally” was added to the second sentence under this section so that it now reads, “However, a bond is generally required, pursuant to § 62-5-411, in the appointment of a conservator, and shall be paid from the funds over which the conservator exercises authority.” Additionally, the language regarding the bond requirement has been revised in an effort to provide more clarity. The language now reads, “Nothing herein is intended to prohibit the waiver of the bond requirement for good cause shown, such as the requirement for use of restricted accounts which protect against unauthorized disposition or other suitable security or protection of the assets.”

SECTION V. COMMISIONS

This section was amended to clarify that commissions on minor settlements are not to be paid at the time of the settlement but may be paid to the conservators at the time of the first accounting, since the net settlement proceeds are assets going into the conservatorship.

SECTION VI. FEES

This section was amended to clarify what fees are charged in Probate Court proceedings. Specifically, the section has been revised to state that if a case is transferred to the Probate Court from a Circuit Court for the appointment of a conservator, the Probate Court shall receive a filing fee of 150.00 plus court costs based on the assets coming into the conservatorship under § 8-21-770(B) for the appointment of the conservator. If the settlement action is initiated in Circuit Court and the appropriate filing fee paid there, and the case is subsequently moved to Probate Court for the approval of the settlement, the Probate Court shall receive a $150.00 filing fee per petition. If appointment of a conservator is also made, a filing fee of $150.00 plus court costs (based on the assets coming into the conservatorship), pursuant to statute, shall be applicable as well. If the settlement action is initiated in the Probate Court, the Probate Court shall receive a $150.00 filing fee per petition. If appointment of a conservator is also made, a filing fee of $150.00 plus court costs (based on the assets coming into the conservatorship), pursuant to statute, shall be applicable as well.

SECTION VII. STRUCTURED SETTLEMENTS

The language in this section was amended to state the jurisdictional amount is determined by the present value of the structured settlement. This section was also amended to provide that Probate Judges who are not comfortable with approving structured settlements may refer them to Circuit Court.

NOW THEREFORE, pursuant to the provisions of the S.C. Const. art. V, § 4, and S.C. Code § 14-23-1140, the attached Minor Settlement Procedure, which is incorporated and made part of this Order, is hereby adopted effective immediately. This Order supersedes all previous orders regarding the minor settlement procedure.

IT IS SO ORDERED.

  s/Jean Hoefer Toal
Jean Hoefer Toal, Chief Justice

Columbia, SC
July 23, 2008


MINOR SETTLEMENT PROCEDURE
July 23, 2008

Section 62-5-433 of the South Carolina Code of Laws provides the basic statutory definitions and procedures for the settlement of claims in favor of or against minors or incapacitated persons.  Other provisions of Tit1e 62, Article 5, Part 4 (Protection of Property of Persons Under Disability and Minors) may also apply in these procedures.

I. AMOUNT OF CLAIM DETERMINES JURISDICTION

“Claim” means the net or actual amount accruing to or paid by the minor or incapacitated person as a result of the settlement, S.C. Code § 62-5-433(A)(2).  This means the actual amount the minor will receive after payment of all expenses of litigation (e.g., attorney fees and litigation costs) and all outstanding reimbursements (e.g., medical bills, Medicaid liens, reimbursements to parents, etc.). 

Claims Over $25,000, S.C. Code § 62-5-433(B)

Circuit Court has exclusive jurisdiction.
Conservator appointment is required.

Claims Under $25,000, S.C. Code § 62-5-433(C)

Circuit and Probate Courts have concurrent jurisdiction.

If a conservator has been appointed, the conservator may settle the claim with or without court authorization.

If no conservator has been appointed, the guardian or guardian ad litem must seek court approval (with or without appointment of conservator); payment must be made in accordance with § 62-5-103.

Clams Under $2,500, S.C. Code § 62-5-433(D)

Settlement may occur without court approval.
Settlement may occur without appointment of a conservator.
Payment may be made in accordance with § 62-5-103.

NOTE: APPOINTMENT OF A CONSERVATOR

When a conservator is to be appointed, the conservator must be appointed by the Probate Court, pursuant to § 62-5-402. There is no requirement for the appointment of a conservator for claims under $10,000, nor is there a prohibition against it.  If requested by the parties or on its own motion, the court, upon good cause shown, may appoint a conservator for amounts under $10,000.  The court should not routinely require the appointment of a Conservator for amounts under $10,000.  Additionally, when a structured settlement is over $10,000, but the minor will not receive more than $10,000 per year during his or her minority, it is generally not appropriate to appoint a conservator.  Absent extraordinary circumstances, it is not appropriate to appoint a conservator when the minor will not receive any funds under a structured settlement until after the minor reaches adulthood.

Where appointment of a conservator is not required by statute, but is required by an insurance carrier, all costs of appointment should be borne by the carrier.

II. INITIATION OF PROCEEDING

A proceeding is initiated by the filing of a verified petition in the appropriate court in "the county in which the minor or incapacitated person resides," S.C. Code § 62-5-433(A)(1).  (This is not an ex parte petition.)

Verified petition must contain (§ 62-5-433(B)(1) or § 62-5-433(C)(1)):

A.  All pertinent facts of the claim
B.  Any payments made
C. Attorney fees
D. Expenses if any
E.  A statement of justification
F. Commentary of best interest of the minor for claims over $25,000
G.  Statement regarding notice requirements (e.g. all parties present or waivers/proof of delivery attached)

Order must contain (§ 62-5-433(B)(2) and (3)):

A.  Approval of settlement
B.  Authorization to consummate and execute a proper receipt and release or covenant not to sue
C.  If net amount is over $10,000, require that payment be made through the conservator or, if no conservator has been appointed, through the clerk of court until a conservator is appointed.
D.   If net amount is under $10,000 and a conservator exists, require payment to conservator and notice to the Probate Court which appointed conservator, or if no conservator, require that payment be made in accordance with § 62-5-103.

III. ATTORNEY

A guardian ad litem is appointed in most cases.

Pursuant to S.C. Code § 62-5-407(a), . . ."if at any time in the proceeding the court determines that the interests of the minor are or may be inadequately represented, it may appoint an attorney to represent the minor, giving consideration to the choice of the minor if fourteen years of age or older.  A lawyer appointed by the court to represent a minor has the powers and duties of a guardian ad litem.  If the minor already has an attorney, that attorney shall act as his guardian ad litem.”

The court may approve a reasonable attorney’s fee to be paid from the settlement proceeds.

IV. BOND

Bond shall not be required in minor settlement proceedings.  However, a bondis generally required, pursuant to § 62-5-411, in the appointment of a conservator, and shall be paid from the funds over which the conservator exercises authority.  Nothing herein is intended to prohibit the waiver of the bond requirement for good cause shown, such as the requirement for use of restricted accounts which protect against unauthorized disposition or other suitable security or protection of the assets.

V. COMMISSIONS

Commissions on minor settlements are not to be paid at the time of the settlement but may be paid to conservators at the time of the first accounting, since the net settlement proceeds are assets going into the conservatorship. 

VI. FEES

If a settlement action is initiated in Circuit Court, the appropriate filing fee shall be paid to the clerk of court.  If the case is then transferred to the Probate Court for the appointment of a conservator, the Probate Court shall receive a filing fee of $150.00 plus court costs based on the assets coming into the conservatorship under § 8-21-770(B) for the appointment of the
conservator.

If the settlement action is initiated in Circuit Court and the appropriate filing fee paid there, and the case is subsequently moved to Probate Court for the approval of the settlement, the Probate Court shall receive a $150.00 filing fee per petition.  If appointment of a conservator is also made, a filing fee of $150.00 plus court costs (based on the assets coming into the conservatorship), pursuant to statute, shall be applicable as well.

If the settlement action is initiated in the Probate Court, the Probate Court shall receive a $150.00 filing fee per petition.  If appointment of a conservator is also made, a filing fee of $150.00 plus court costs (based on the assets coming into the conservatorship), pursuant to statute, shall be applicable as well.

VII. STRUCTURED SETTLEMENTS

Structured settlements should be approved with appropriate consideration of appointment of a conservator for monies paid to a minor during minority.  The jurisdictional amount is determined by the present value of the structured settlement.  Probate Court judges who are not comfortable with approving these settlements may refer them to Circuit Court.