§ Rule 2206 Settlement, Compromise, Discontinuance and Judgment
Rule 2206. Settlement, Compromise, Discontinuance and Judgment
(a) No action for wrongful death in which a minor or an incapacitated person has an interest shall be discontinued nor shall the interest of a minor or an incapacitated person in any such action or in a judgment for damages recovered therein be compromised or settled until the court, upon petition of any party in interest, shall allow the discontinuance or approve the compromise or settlement as being fair and equitable.
(b)(1) When as the result of a verdict, judgment, compromise, settlement or otherwise it has been determined that a sum of money is due the plaintiff in an action for wrongful death, the court, upon petition of any party in interest, shall make an order designating the persons entitled to share in the damages recovered and the proportionate share of the net proceeds to which each is entitled. If a share shall be payable to a minor or incapacitated person, the court shall designate as the person to receive such share a guardian of the estate of the minor or incapacitated person, qualified to receive the fund, if there is one or one is to be appointed. The share to be received by the guardian of the estate may include a structured settlement underwritten by a financially responsible entity that assumes responsibility for future payments or a trust as described in subdivision (b)(4)(iii) of this rule.
(2) If the minor has no such guardian, and none is to be appointed, the court upon petition may order an amount not more than twenty-five thousand dollars ($25,000.00) to be paid for the benefit of the minor to the guardian of the person or to the natural guardian or to the person or agency by whom the minor is maintained or to the minor.
Note: The amount payable under paragraph (2) conforms to the amount set forth in Section 5101 of the Probate, Estates and Fiduciaries Code, 20 Pa.C.S. § 5101, relating to when a guardian is unnecessary.
(3) If the incapacitated person has no such guardian, and none is to be appointed, the court upon petition may order an amount not more than twenty-five thousand dollars ($25,000.00) to be paid for the benefit of the incapacitated person to the guardian of the person or to the person or agency by whom the incapacitated person is maintained.
Note: The amount payable under paragraph (3) conforms to the amount set forth in Section 5101 of the Probate, Estates and Fiduciaries Code, 20 Pa.C.S. § 5101, relating to when a guardian is unnecessary, incorporated by reference into Section 5505 of the Code, 20 Pa.C.S. § 5505.
(4) If the minor or the incapacitated person has no such guardian, and none is to be appointed, the court may order
(i) any amount in cash of a resident or nonresident minor or incapacitated person to be deposited in one or more savings accounts in the name of the minor or the incapacitated person in banks, building and loan associations, savings and loan associations or credit unions, deposits in which are insured by a Federal governmental agency, provided that the amount deposited in any one such savings institution shall not exceed the amount to which such accounts are thus insured, or in one or more accounts in the name of the minor or the incapacitated person investing only in securities guaranteed by the United States government or a Federal governmental agency managed by responsible financial institutions. Every such order shall contain a provision that no withdrawal can be
made from any such account until the minor attains majority or unless the incapacitated person is adjudicated to have capacity, except as authorized by a prior order of the court. Proof of the deposit shall be promptly filed of record;
Note: The order should provide for deposits in more than one savings institution if future accrued interest may reasonably be expected to increase a single deposit beyond the insured limit.
For the definition of savings account, see Rule 76.
The rule contemplates the deposit of money in an account investing in federally guaranteed securities, withdrawals from which may be blocked, and not the direct investment in a particular security.
(ii) an agreement be executed providing for a structured settlement underwritten by a financially responsible entity that assumes responsibility for future payments. All moneys paid from the structured settlement during minority or incapacity shall be paid into a restricted account as provided by subdivision (b)(4)(i) of this rule;
(iii) a trust agreement be executed with a corporate fiduciary which is independent from the minor or incapacitated person and anyone acting on behalf of the minor or incapacitated person and is lawfully authorized to engage in trust business in Pennsylvania or the state of the minor's or incapacitated person's domicile, which trust
(i) is designated to receive the fund;
(ii) contains such terms for investment, disbursement and distribution of the fund as the court deems proper; and
(iii) expressly provides that it is subject to the court's continuing jurisdiction, including the court's right to modify or terminate, for cause shown, although the trust may be otherwise irrevocable.
Note: This rule permits the use of a trust, including a special needs trust.
(c) In approving a compromise or settlement, or making any order under subdivision (b) of this rule, the court may also approve an agreement for the payment of counsel fees and other proper expenses out of the share of damages to which the minor or incapacitated person is entitled.
(d) When an order designating the persons entitled to share in the damages has been entered, the defendant may pay the amount due under the verdict, judgment, compromise or settlement to the plaintiff who shall hold the money as trustee for the persons designated in the order and shall mark the action discontinued or the judgment satisfied as the case may be.