Structured Settlements Involving Minors or Incompetent Adults

When a child or incompetent adult is involved in the accident, the financial burden can be even more severe as minors are still young and inexperienced with managing money.  

Options for a Child Who Receives Money From a Settlement:

1. The settlement can be held by the court in a low-interest account until the minor reaches legal maturity, usually age 18 or 19, at which time the money is released to the claimant.
2. Create a structured settlement—a stream of tax-free payments tailored to meet the child’s specific future needs.
3. Place the settlement proceeds in a Settlement Preservation Trust or Special Needs Trust.
4. Use a structured settlement in combination with a trust.

 The Safest, Most Secure Settlement Option:

Many attorneys and courts view a structured settlement as a powerful planning tool to ensure settlement monies are available for the child’s long-term needs—such as medical expenses, education, living expenses, the future purchase of a home and/or car, a wedding, etc.

A structured settlement—used alone or in combination with a trust—is the safest, most secure settlement option for a child.

For more information on settlements involving minors or if you are in a situation where a structured settlement may be appropriate, click here to contact us.

Both plaintiff and defense must agree upon a structured settlement. The defendant must purchase the annuity on behalf of the minor in order for the payments to be tax-free. The same tax-free benefits are not inherent if the plaintiff receives the settlement award and then uses that money to purchase an annuity.