A structured settlement is an arrangement in which some or all of an injury recovery is paid out over time, often through an annuity, rather than as a single lump sum. In catastrophic truck injury cases, where the injured person may face decades of medical needs and lost earning capacity, structured arrangements come up frequently. This guide explains the role a Georgia court plays in approving and shaping structured settlements and the limits on a court’s authority to impose one.
Settlement is generally a matter of party agreement
As a starting point, a settlement is a contract between the parties. A court generally cannot force a competent adult plaintiff and a defendant to settle a case at all, and it cannot dictate that a settlement an adult chooses to enter must be structured rather than paid as a lump sum. A competent adult who reaches a settlement is ordinarily free to decide, as part of the negotiation, whether to take a lump sum, a structure, or a combination. So in the typical case involving only competent adult parties, a Georgia court does not order a structured settlement; the parties agree to one if they choose.
The picture changes when the law requires court involvement to protect a person who cannot fully protect their own interests. Two recurring situations in catastrophic truck injury cases are settlements involving minors and settlements involving adults who lack legal capacity.
Settlements involving minors
When a catastrophic truck crash injures a child, Georgia law requires court oversight of the settlement, and that oversight is where a court’s influence over a structure becomes significant. The governing statute is O.C.G.A. 29-3-3, which addresses the compromise of a minor’s claim.
Under that statute, if the proposed gross settlement of a minor’s claim is $25,000 or less, a natural guardian may compromise the claim without court approval. If the gross settlement exceeds $25,000 but the net settlement is $25,000 or less, the settlement must be submitted for court approval, though a conservator is not required at that level. Larger settlements involve additional requirements, including the appointment of a conservator to manage the funds. The statute defines gross settlement as the present value of all amounts paid or to be paid, including cash, litigation expenses, attorney fees, and amounts allocated to a structured settlement, and defines net settlement as the gross settlement reduced by fees, expenses, enforceable liens, and the present value of amounts to be received after the minor reaches majority or placed in an approved trust.
In approving a minor’s settlement, the court applies a best-interest-of-the-minor standard. O.C.G.A. 29-3-3 expressly contemplates that a court-approved compromise may involve a structured settlement or the creation of a trust on terms the court approves or creates. This is the clearest situation in which a Georgia court does more than rubber-stamp a deal: in reviewing a minor’s settlement, a court may decline to approve a proposed structure it finds is not in the child’s best interest, and it may approve or shape a structure or trust as a condition of approval. When a lawsuit has been filed, the court in which the action is pending has jurisdiction to approve the settlement; in other situations the probate court may be involved.
Settlements involving incapacitated adults
Catastrophic truck injuries sometimes leave an adult unable to manage their own legal and financial affairs. Where an injured adult lacks legal capacity, Georgia’s guardianship and conservatorship provisions in Title 29 require court involvement in handling the person’s property and settling claims on their behalf. As with minors, a court reviewing such a settlement evaluates whether the arrangement serves the protected person’s interests, and a structured payout or trust can be part of what the court approves or requires as a condition of approving the compromise. The exact procedure depends on whether a conservator has been appointed and on the posture of any pending litigation.
Why structures are common in catastrophic cases
Even outside the situations where court approval is mandatory, structured settlements are common in catastrophic truck injury cases for practical reasons. Periodic payments can be matched to anticipated future medical costs and living expenses, can provide a measure of protection against premature depletion of funds, and carry federal tax treatment under which qualifying periodic payments for physical injury are generally received free of federal income tax. These features make a structure attractive to parties negotiating a large recovery, which is why structures often appear by agreement rather than by court order.
The limits of a court’s authority
The core distinction is between approving and ordering. A Georgia court does not have general authority to compel competent adult parties to accept a structured settlement against their will. What a court does have, in cases involving minors or incapacitated adults, is the authority and the duty to review the proposed settlement, including any proposed structure, and to approve, reject, or condition it based on the protected person’s best interest. In that protective review, the court can effectively require a structure or trust as the price of approval, and it can reject a lump-sum arrangement it finds inadequate to safeguard the protected person. Outside that protective context, the structure is a product of the parties’ negotiation.
Summary
A Georgia court generally cannot order competent adult parties in a catastrophic truck injury case to enter a structured settlement, because settlement is a contract the parties negotiate. Where the injured person is a minor or an incapacitated adult, however, court approval is required, and O.C.G.A. 29-3-3 and Georgia’s conservatorship provisions give the court authority to review, shape, condition, or reject a proposed structure under a best-interest standard. In practice, structured settlements appear in catastrophic cases both by party agreement and, in protective proceedings, as terms a court approves or creates.
Disclaimer
This article is provided strictly for general educational and informational purposes. It is intended to explain how Georgia law works as a matter of public legal education, and it does not constitute legal advice, a legal opinion, or a recommendation about any particular course of action. Reading this article, or contacting the website on which it appears, does not create an attorney-client relationship between the reader and any law firm, attorney, or author.
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