A. In any action or suit wherein a person under a disability is a party, the court in which the matter is pending shall have the power to approve and confirm a compromise of the matters in controversy on behalf of such party, including claims under the provisions of any liability insurance policy, if such compromise is deemed to be to the interest of the party. Any order or decree approving and confirming the compromise shall be binding upon such party, except that the same may be set aside for fraud.
§ 8.01-424.Approval of compromises on behalf of persons under a disability in suits or actions to which they are parties.
Chapter 16. Compromises · Last amended 2024 · Last verified July 16, 2026
In one sentenceSection 8.01-424 lets a court approve a compromise on behalf of a person under a disability who is a party to litigation or whose damage claim is being settled, and directs how the settlement proceeds must be paid out — into court, to a fiduciary, into a minor’s college savings trust, or through insurer-secured periodic payments.
Full Text of § 8.01-424
B. In case of damage to the person or property of a person under a disability, caused by the wrongful act, neglect, or default of any person, when death did not ensue therefrom, any person or insurer interested in compromise of any claim for such damages, including any claim under the provisions of any liability insurance policy, may, upon motion to the court in which the action is pending for the recovery of damages on account of such injury, or if no such action is pending, then to any circuit court, move the court to approve the compromise. The court shall require the movant to give reasonable notice of such motion to all parties and to any person found by the court to be interested in the compromise.
D. In any compromise action, the court shall direct the payment of the proceeds of the compromise agreement, when approved, as follows:
1. Payment of the sum into court as provided by § 8.01-600 or to the general receiver of such court;
2. In the case of damage to the person or property of a minor, by investment in a college savings trust account for which the minor is the beneficiary pursuant to a college savings trust agreement with the Commonwealth Savers Plan as set forth in subsection B of § 23.1-707, provided that (i) the investment options pursuant to such agreement are restricted to target enrollment portfolios; (ii) the order or decree approving and confirming the compromise requires the minor beneficiary's parent, as that term is defined in § 22.1-1, to act as the custodian of the account; and (iii) except in the case of a distribution from the account to be applied toward the minor beneficiary's qualified higher education expenses, as that term is defined in § 529 of the Internal Revenue Code of 1986, as amended, or other applicable federal law, the order or decree approving and confirming the compromise prohibits the minor beneficiary's parent from making any transfer, withdrawal, termination, or other account transaction unless the court provides prior approval pursuant to a written order;
3. To a duly qualified fiduciary of the person under a disability, after due inquiry as to the adequacy of the bond of such fiduciary;
4. As provided in § 8.01-606; or
5. Where the agreement of settlement provides for payments to be made over a period of time in the future, whether such payments are lump sum, periodic, or a combination of both, the court shall approve the settlement only if it finds that all payments which are due to be made are (i) secured by a bond issued by an insurance company authorized to write such bonds in this Commonwealth or (ii) to be made or irrevocably guaranteed by an insurance company or companies authorized to do business in this Commonwealth and rated "A plus" (A+) or better by Best's Insurance Reports. Payments made under this subdivision totaling not more than $4,000 in any calendar year may be paid in accordance with § 8.01-606. Payments made under this subdivision totaling more than $4,000 in any calendar year while the recipient is under a disability shall be paid to a duly qualified fiduciary after due inquiry as to adequacy of the bond of such fiduciary.
E. Payments made under this section, in the case of damage to the person or property of a minor, may be made payable in the discretion of the court to the parent or guardian of the minor to be held in trust for the benefit of the minor. Any such trust shall be subject to court approval and the court may provide for the termination of such trust at any time following attainment of majority which the court deems to be in the best interest of the minor. In an order authorizing the trust or additions to an existing trust, the court may order that the trustee thereof be subject to the same duty to qualify in the clerk's office and to file an inventory and annual accountings with the commissioner of accounts as would apply to a testamentary trustee.
Plain-English Summary
Subsection A gives the court handling a case the power to approve a compromise on behalf of a party under a disability, including a settlement of a liability-insurance claim, whenever the compromise serves that party’s interest. Once approved, the order binds the party under a disability the same as any other litigant — the only way around it later is a showing of fraud.
Subsection B extends that approval power to situations where no lawsuit has yet been filed. If a person under a disability suffered injury to person or property, and the injury did not result in death, anyone interested in compromising the claim — including an insurer — can move the court where a related action is pending, or any circuit court if none is, to approve the settlement, after giving reasonable notice to all interested parties. Subsection C sends wrongful death compromises to the specific procedure in § 8.01-55 instead, without disturbing whatever § 8.01-76 separately provides.
Subsection D is the payment-distribution menu. Once a compromise is approved, the court directs the proceeds paid one of several ways: into court or to the general receiver; for a minor’s injury claim, into a Commonwealth Savers Plan college savings trust account, with restricted investment options, the parent acting as custodian, and transactions locked down except for qualified education expenses absent further court order; to a duly qualified fiduciary after inquiry into the adequacy of that fiduciary’s bond; through the mechanism in § 8.01-606; or, for settlements paying out over time, through payments secured by a bond or guaranteed by an insurer rated A+ or better — with payments over $4,000 in a calendar year while the person remains under a disability going to a bonded fiduciary rather than directly to them.
Subsection E lets the court instead route a minor’s settlement funds to a parent or guardian to hold in trust, subject to court approval and oversight — including, if the court orders it, the same qualification, inventory, and accounting duties that apply to a testamentary trustee.
Frequently Asked Questions
Can a court approve a settlement on behalf of a minor or incapacitated person?
Yes. The court in which the matter is pending may approve and confirm a compromise on behalf of a party under a disability if the compromise serves that party’s interest.
Can a settlement be approved before a lawsuit is even filed?
Yes, for injury to a person under a disability that did not result in death — an interested party, including an insurer, can move any circuit court to approve the compromise after giving reasonable notice.
How are settlement funds for a minor typically distributed under this section?
Several ways: payment into court or to the general receiver, into a Commonwealth Savers Plan college savings trust account under specific conditions, to a duly qualified fiduciary, or through the mechanism in § 8.01-606.
What happens if a settlement pays out over time instead of in a lump sum?
The court can approve it only if the future payments are secured by a bond or guaranteed by an insurer rated A+ or better, with payments over $4,000 a year going to a bonded fiduciary while the recipient remains under a disability.
Can settlement money for a minor go directly to a parent instead of a fiduciary?
Yes, in the court’s discretion, to be held in trust for the minor’s benefit, subject to court approval and, if the court so orders, the same accounting duties as a testamentary trustee.
Amendment History
Code 1950, §§ 8-169, 8-170; 1956, c. 575; 1960, cc. 301, 302; 1964, c. 500; 1970, c. 10; 1977, c. 617; 1985, c. 499; 1988, c. 409; 1991, cc. 97, 257; 1993, c. 945; 1994, c. 39; 1998, cc. 584, 607, 610; 2009, c. 688; 2022, c. 535; 2024, c. 217.
Source & verification. Section text and amendment history are
reproduced verbatim from the Code of Virginia, published by the
Code of Virginia, Virginia Division of Legislative Automated Systems. Last verified July 16, 2026.
· Official source
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