What Is A Structured Settlement For A Minor

Structured settlements can be used to finance college educations by providing a certain sum of income each year that the child would attend college.

What is a structured settlement for a minor.

A structured settlement allows a personal injury claimant to obtain cash over a period of time rather than obtaining his settlement in a lump sum. It is usually arranged to begin when the minor reaches the age of majority which can differ depending on the state you live in or sooner if the proceeds are paid into a trust account. The key difference between an adult owning a structured settlement and a minor owning one is control. Court approval is required for all settlements involving minors no matter how small the sum.

Structured settlements are regulated by insurance companies. Structured settlements only apply to large personal injury cases usually involving policy limits settlements of at least 100 000 00. Structured settlements for minors. Another option for protecting a child s injury settlement is the purchase of an annuity.

Under the laws of virtually all states now you may not take the funds from a large settlement usually over 5 000 on behalf of your minor child and invest it yourself. A structured settlement annuity for minors is typically established by the court to provide for an affected party financially. This is set by state law and is the topic of this article. Please seek the advice of a qualified professional before making financial decisions.

Structured settlements started in the late 1970 s and they are a big business. A structured settlement is one of the safest financial tools out there. Structured settlements reduce the risk that anyone will embezzle misuse or withhold large sums of money belonging to the injured claimant. Settlements involving minors introduction.

Special needs trusts and other options. Litigation involving someone under the legal age imposes requirements as to how any settlement is to be achieved and distributed. It is a good idea to check with the court for any particular practices followed by that court in approving minors settlements. Choosing a structured settlement for a minor may also speed up court approval because this arrangement is designed to protect minors interests.

The funds may commonly be used to pay for medical bills therapy rehabilitation or other similar expenses for the child. Structured settlements for minors are usually paid through an annuity from a life insurance company just as for adults.