Structured settlements help to secure a brighter future for minors who have suffered a serious personal physical injury, dealing with the wrongful death and loss of a parent, or an emotional trauma with or without physical injury.
Court approval is generally required when structured settlements are proposed for, or on behalf of minors and children. While the Court of jurisdiction may vary by the type of legal case, court oversight is necessary regardless of whether your child’s lawsuit involves medical malpractice, personal injury, or the wrongful death of a parent or sibling in an auto accident, construction accident, aviation accident or due to a defective product.
We have extensive experience working on all aspects of minors' settlements, with attorneys, parents and guardians, guardians ad litem and all parties to settlements for minors. Many structured settlement annuitants, whether we have written them or not, contact us when they make the transition to young adulthood (or experience other life events), to ask questions. We provide education, context and an orientation about their structured settlements and a resource for other financial matters. This has also been helpful in addressing the root causes of unwarranted sales of structured settlement payments.
The judge’s role, in most jurisdictions, is to assist in the determination of the settlement’s fairness and to assure that funds are safeguarded until your child or minor ward is an adult. If cash is paid in a lump sum, most judges require that the funds be placed in a "protected" or "blocked" account until the age of majority (age varies by state law). The money in a blocked account is taxed yearly on interest in excess of a modest exempt amount. The rate of return on the protected or blocked account is usually quite low, typically equivalent to a savings account. With such protected or blocked accounts, your child or minor ward assumes complete control of the money, in a lump sum distribution, at the age of majority. This may have implications on ability to get student loans.
Many parents and guardians are, and should be (and a young adult child should be) concerned with the potential for wasteful dissipation of settlement proceeds. The responsibility of managing all of the settlement money is immense at an age when the child or minor may not be financially savvy or mature. The stories of dissipation are unfortunately plentiful . A early study, published in a California practice guide, showed that most cash settlements are spent within five years. Even a financially responsible child can make mistakes. Take a moment to think about what you and your child or minor ward went through to reach the point of settlement.
Consider the loss and the time from your lives taken by the lawsuit. A liability situation (car accident), future medicals that would have qualified under Medicaid, impulsive spending, or failed marriage, or a gullible mistake, could wipe out the funds. Structured settlements are a great settlement option for minors that helps solve many of these problems. A structured settlement guarantees specific dollar amounts that can be spread over key years in your child’s or minor ward’s life for a finite period of time or even for entire life of your child, if desired.
A structured settlement can be paired with other strategies such as a trust or investment account to provide a bespoke solution for the client.
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Last updated November 20, 2023
4structures.com, LLC
The Structured Settlements and Settlement Planning Company
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888-325-8640
646-849-1588
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Structured Settlement Experts and Settlement Planning Consultants for settlements from claims or lawsuits arising out of Aviation accidents, Medical Malpractice, settlements involving Serious Personal Injury, Wrongful Death, Wrongful Incarceration, Employment, Civil Rights, Discrimination of any type, Auto accidents, Motorcycle accidents, Maritime accidents, Workers' Compensation, Product Liability, Real Estate Liability, Construction Defect claims or lawsuits, Landlord/Tenant,
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Structured settlements and structured settlement brokerage, settlement planning, Sudden Money®, financial transitionist, funding agreements and insurance related services provided by 4structures.com LLC.
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