Structured Settlements and Minors

How Structured Settlements are Different with Minors.

When a personal injury plaintiff is a minor, the courts are presented with a difficult challenge deciding how to payout the award.  The child must be taken care of both as a minor and also as an adult.  In personal injury cases related to product liability, wrongful death, medical malpractice, or negligence, a minor child plaintiff is generally not awarded a lump sum payment.  Children are more likely to receive a structured settlement or a combination of both a lump sum and a structured settlement over time. The courts typically follow this kind of strategy to ensure the long-term financial stability of the child.

Structured settlements are usually awarded to minor children to make sure the child’s best interests are taken into account. Structured settlements can help prevent parents or guardians from using the child’s money for their own personal needs rather than for the child’s needs. A minor cannot directly access or control funds from a structured settlement until they reach the “Age of Majority” and become an adult.  This is one of the biggest differences between how structured settlements work for adults versus minors.  In personal injury cases with minors, the responsibility falls in the hands of the judge to decide how the minor child will be awarded their structured settlement payments.

Structured Settlements for Minors

The responsibility falls on the judge in personal injury cases to approve a minor’s structured settlement award. The judge will likely take the following things into consideration when determining the best way to set up the minor’s settlement:

  • Current needs of the child
  • Child’s possible loss of future earnings
  • Child’s future needs
  • Disability of the minor, if any

A structured settlement awarded to a minor child should be designed to support the child while he or she is still a minor as well as when the child becomes an adult.  This includes allocating funds for major expenses such as college tuition, car or mortgage payments, and general cost-of-living funds.

Proper Use of Settlement Payments for a Minor

When a child is awarded compensation due to the wrongful death of his or her parents or guardians, the court must decide where payments are sent until the child reaches adulthood. The court’s decision can vary on a case-by-case basis, but ultimately the court must appoint one of the following entities to control the child’s funds:

  • court-appointed guardian
  • court-monitored bank account
  • trust fund

Advantages of a Structured Settlement for Minors

When the child receives compensation in the form of a structured settlement, the court does everything in its power to ensure the funds are utilized properly and the child’s financial opportunities are maximized.  Some additional benefits of structured settlements for minors include:

  • Return rate is fixed so payments cannot decrease for any external reason.
  • Regulated by insurance companies in all 50 states.
  • Annuity payments, including money earned by interest, are not taxed as income.
  • The money is protected until the child reaches adulthood.