{"data":{"id":"us-ky/krs-387.278","jurisdiction":"us-ky","citation":"KRS 387.278","heading":"Settlement agreement by person with legal custody of minor -- Affidavit or","body":"verified statement -- Payment -- Withdrawal or transfer from account -- Effect\nof agreement -- Liability -- Filing for guardianship or conservatorship -- Use of\na restrict ed savings or other restricted investment account or issuance of\nannuity by financial institutions permitted.\n(1) A person having legal custody of a minor may settle or compromise and enter into a\nsettlement agreement with a person against whom the minor h as a claim or from\nwhom the minor is to receive proceeds from the sale of real estate, for the\nsettlement of any estate, or from any other source if:\n(a) A guardian or conservator has not been appointed for the minor;\n(b) The total amount of the settlement  proceeds due to the minor, after reduction\nfrom the total settlement amount of all medical expenses, medical liens, all\nother liens, and reasonable attorney fees and costs, is twenty -five thousand\ndollars ($25,000) or less if paid in cash, by draft or check, by direct deposit, or\nby the purchase of a premium for an annuity;\n(c) The moneys payable under the settlement agreement will be paid as provided\nin subsections (3) and (4) of this section; and\n(d) The person entering into the settlement agreement on b ehalf of the minor\ncompletes an affidavit or verified statement that attests that the person:\n1. Has made a reasonable inquiry and that to the best of the person's\nknowledge:\na. The minor will be fully compensated by the settlement; or\nb. There is no pract ical way to obtain additional amounts from the\nparty or parties entering into the settlement agreement with the\nminor; and\n2. Understands and acknowledges that he or she is obligated by law to\ndeposit the settlement directly into a restricted savings or other restricted\ninvestment account, or purchase an annuity, as provided in subsection\n(3) of this section.\n(2) The attorney rep resenting the person entering into the settlement agreement on\nbehalf of the minor, if any, shall maintain the affidavit or verified statement\ncompleted under subsection (1)(d) of this section in the attorney's file for a period\nof five (5) years.\n(3) The moneys payable under the settlement agreement shall be paid as follows:\n(a) If the minor or person entering into the settlement agreement on behalf of the\nminor is represented by an attorney and the settlement is paid in cash, by draft\nor check, or by dire ct deposit into the attorney's trust account maintained\nunder Rule 3.830 of the Supreme Court of Kentucky to be held for the benefit\nof the minor, the attorney shall:\n1. Timely deposit the moneys received on behalf of the minor directly into\na restricted s avings or other restricted investment account that only\nallows withdrawals from the account under any of the circumstances set\nforth in subsection (4) of this section; or\n2. Purchase an annuity by direct payment to the issuer of the annuity with\nthe minor designated as the sole beneficiary of the annuity;\n(b) If the minor or person entering into the settlement agreement on behalf of the\nminor is not represented by an attorney and the settlement is paid by check,\ndraft, or direct deposit, the minor or person  entering into the settlement\nagreement on behalf of the minor shall provide the person or entity with\nwhom the minor has settled the claim with the information sufficient to draw\na check or draft made payable, or complete an electronic transfer of settlement\nfunds:\n1. Into a restricted savings or other restricted investment account that only\nallows withdrawals from the account under any of the circumstances set\nforth in subsection (4) of this section; or\n2. To purchase an annuity by direct payment to the i ssuer of the annuity\nwith the minor designated as the sole beneficiary of the annuity; and\n(c) If the minor is under the care, custody, and control of the Commonwealth, the\nCabinet for Health and Family Services shall establish a restricted trust\naccount, or subaccount of a trust account, that earns interest for the benefit of\nthe minor, for the purpose of receiving moneys payable to the minor under the\nsettlement agreement. If the settlement is paid:\n1. In cash or by draft or check, the moneys received on behalf of the minor\nshall be timely deposited into the account established under this\nparagraph, and notice of the deposit to the minor and the person entering\ninto the settlement agreement on behalf of the minor shall be delivered\nby personal service or first-class mail;\n2. By direct deposit, the minor, the person entering into the settlement on\nbehalf of the minor, or the cabinet shall provide the person or entity with\nwhom the minor has settled the claim with the information sufficient to\ncomplete an ele ctronic transfer of settlement funds into the account\nestablished under this paragraph, and notice of the deposit to the minor\nand the person entering into the settlement agreement on behalf of the\nminor shall be delivered by personal service or first-class mail; or\n3. Through the purchase of an annuity, direct payment shall be made to the\nissuer of the annuity with the minor designated as the sole beneficiary of\nthe annuity.\n(4) The moneys in the minor's restricted savings or other restricted investment ac count,\ntrust account, or trust subaccount established under subsection (3) of this section\nmay not be withdrawn, removed, paid out, or transferred to any person, including\nthe minor, except as follows:\n(a) Pursuant to court order;\n(b) Upon the minor attaining the age of majority or being otherwise emancipated;\nor\n(c) Upon the minor's death.\n(5) A signed settlement agreement entered into on behalf of the minor in compliance\nwith subsection (1) of this section:\n(a) Is binding on the minor without the need for court approval or review;\n(b) Has the same force and effect as if the minor were a competent adult entering\ninto the settlement agreement; and\n(c) Shall serve to fully release all claims of the minor encompassed by the\nsettlement agreement.\n(6) (a) As use d in this subsection, \"financial institution\" means any person doing\nbusiness under the laws of any state or commonwealth or the United States\nrelating to banks, bank holding companies, savings banks, savings and loan\nassociations, trust companies, or credit unions.\n(b) A financial institution or other entity may open a restricted savings or other\nrestricted investment account, or issue an annuity, pursuant to this section.\n(c) If a financial institution or other entity elects to open a restricted savings o r\nother restricted investment account, or issue an annuity, pursuant to this\nsection, a court order shall not be required to open the account or issue the\nannuity.\n(d) A person that elects to deposit or otherwise direct moneys into a restricted\nsavings or other restricted investment account in accordance with subsection\n(3) of this section may execute documents to open and administer the account.\n(7) A restricted savings or other restricted investment account that is opened and\nadministered pursuant to this section shall be exempt from the provisions of KRS\nChapter 393A until the earlier of one (1) of the circumstances set forth in subsection\n(4) of this section.\n(8) (a) Any person or entity against whom a minor has a claim that settles the claim\nwith the minor in good faith under this section shall not be liable to the minor\nfor any claims arising from the settlement of the claim.\n(b) An insurer who in  good faith transfers funds at the direction of the settling\nminor or the minor's representatives into a restricted savings or other\nrestricted investment account, or to purchase an annuity, shall not be liable to\nthe minor or the minor's representatives f or any claims arising from the use of\nthose funds after the transfer is completed.\n(9) Nothing in this section shall prevent anyone acting on behalf of the minor from\nfiling for guardianship, limited guardianship, or conservatorship in the District\nCourt and requesting the District Court to approve the settlement on behalf of the\nminor and oversee the settlement proceeds.","path":["KRS Chapter 387"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=54462","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:20Z","sha256":"756ba94ad45953288f82444772165b26e49e64ede0c455bfa041dae7009ed8cf","source_id":"us-ky","stale":false,"prev":"us-ky/krs-387.270","next":"us-ky/krs-387.280"},"notice":"GroundRules: Original legal text. Not legal advice."}