Structured Settlements and Minors
How Structured Settlements are Different with Minors.
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.
