Florida Restricted Depository for Minor Settlement- Preventing a Breach
June 28, 2017
Child injury settlements in Florida that result in a net payout of more than fifteen thousand dollars to a minor must be placed into a “restricted depository,” maintained by a court appointed Guardian, to protect the funds until the child reaches the age of majority. Restricted depository accounts can only be accessed by court order. However, if a restricted depository account is not set up correctly, the Florida resticted depository can be subject to breach.How Do We Prevent This?
Lawyers involved in appointing guardians and funding restricted depositories should implement practices to prevent misuse of funds. Examples of these practices include:
- Do not use a non-professional guardian’s bank of choice. Personal relationships between guardian and banker, especially at small, regional banks have previously led to misallocation of child settlement funds in Florida.
- Inform the guardian in writing of the account restrictions and criminal sanctions for spending protected funds. A misunderstanding on the part of the guardian and mistake on the part of the bank can lead to restricted funds being spent by mistake.
- Conducting thorough background checks of potential guardians: Although courts will generally screen potential guardians for felony convictions, lesser offenses or dropped charges may be a red flag (especially financial crimes). Professional bonded guardians are a good option to protect settlement funds when family members pose a risk of misuse.
- Accompany the guardian to the bank to establish the account. Inexperienced bankers without knowledge of restricted depository procedures can sometimes improperly establish an account with insufficient safeguards to prevent withdraws. Your guidance in the process ensures that the account is secure.
Depending on the age of the injured child, restricted depositories can remain in place for over a decade. Taking the time to do it right on the front end will prevent massive headaches down the line.
Written by Charles “Cary” David