Parent and child: Challenge to settlement proceeds statute fails

Where the court approved a settlement involving a minor and ordered the settlement funds to be held by the court until the child reached the age of majority, and the parents argued they had a fundamental right to manage their child’s settlement proceeds absent a finding of unfitness, this challenge failed. The asserted right is neither fundamental nor specially protected, and the statute survived rational basis review.

Background

The case arises from the circuit court’s order approving a compromise settlement for J.K., a minor, and directing that the settlement funds be held by the clerk of the court until J.K. reaches the age of majority. The child’s parents, Monte and Ginger Kuligowski, argue that Code § 8.01-424 unconstitutionally infringes upon their fundamental right, as fit parents, to manage their child’s settlement proceeds absent a finding of unfitness.

Due Process

The right asserted here is neither fundamental nor specially protected. The federal Due Process Clause is silent on the rights of parents, and thus, this court considers the U.S. Supreme Court’s construction of substantive due process. The parents cite no precedential authority explicitly recognizing a parent’s fundamental right to manage the property of their child. Instead, they submit more generally that the “interest of parents in the care, custody, and control of their children” encompasses the asserted right.

The cited cases recognize and protect the right of parents to raise their children free from unwarranted state interference. The circumstances in which this right has been invoked—custody, adoption, nonparental visitation, education, religion and termination of parental rights—underscore both the significance of the parent-child relationship and the primary role of parents in directing a child’s upbringing and education.

None of these authorities, however, establishes a fundamental right to control a child’s property. Accordingly, contrary to the parents’ position, no fundamental right is implicated under either the federal or state Constitutions.

Code § 8.01-424

The parents also contend Code § 8.01-424 “violates,” that is, conflicts with Code § 1-240.1, which recognizes a “[parent’s] fundamental right to make decisions concerning the upbringing, education, and care of the parent’s child.” This argument is unavailing. Considering its plain language, the statute neither extends nor purports to extend to parents an exclusive right to oversee a child’s property. Significantly, Virginia caselaw reflects the well-settled principle that a child’s property is a legally separate interest from that of the parents.

Because no fundamental right is affected here, strict scrutiny review of Code § 8.01-424 is not mandated. The statute must nonetheless withstand rational basis review, i.e., bearing a reasonable relation to a proper purpose, to survive a due process challenge.

Rational review

Respecting the first prong of the rational basis test, whether the statute serves a legitimate purpose in authorizing the circuit court to supervise the disposition of a minor’s personal injury settlement proceeds, on several occasions, the U.S. Supreme Court has credited the state’s long-recognized interests as parens patriae, often in balance with the parent’s interests in a child. Likewise, Virginia precedent has affirmed the state’s role in protecting minor children as parens patriae, as well as the powers conferred upon the courts to enforce this role.

Here, Code § 8.01-424(A) provides that “[i]n any action or suit wherein a person under a disability is a party, the court . . . shall have the power to approve and confirm a compromise . . . if such compromise is deemed to be to the interest of the party.” This court finds that the state’s parens patriae interest is a proper purpose. Thus, the first prong of the rational basis test is satisfied.

Under the second prong, the court must determine whether the provisions of § 8.01-424 are rationally related to the state’s parens patriae interest. The touchstone of this analysis is reasonableness. Here, § 8.01-424 provides ample meaningful options for management of infant settlement proceeds and bears a reasonable relation to the state’s parens patriae interest in preserving J.K.’s funds from dissipation. Accordingly, there is a rational basis for the statute.

J.K. v. Trustguard Insurance Company, Record No. 1427-24-1, Nov. 5, 2025. CAV (unpublished opinion) (Bernhard). From the Circuit Court of the City of Hampton (Henderson-Stith). Monte E. Kuligowski (Monte E. Kuligowski, P.C., on briefs), for appellant. (Barrett Enix; Michael L. AtLee, Guardian ad litem for the infant child; Kalbaugh, Pfund & Messersmith, P.C.; Hall, Fox, and AtLee, P.C., on brief), for appellee. VLW 025-7-321. 14 pp.