Structured Settlements for Minors

Just as with adults, minors can be the plaintiff in a lawsuit involving product liability, wrongful death, medical malpractice, or negligence claims. However, when a child is the victim, it can be difficult to figure out how to rightfully compensate them before and after they reach adulthood. For that reason, as it pertains to structured settlements for minors, there are a variety of ways to ensure the long-term financial stability of the child.

Unlike many personal injury settlements involving  adults, children do not receive their settlement proceeds as a lump sum. Instead, the settlement proceeds will usually be placed in a structured settlement, a trust, or a combination of the two.

The difference between a structured settlement set up for a child and a structured settlement set up for an adult is that, despite being entitled to the settlement, minors cannot directly access and control the funds until they reach the age or majority. It is the responsibility of the judge in the case to approve the process and method by which the minor will receive their payments.1

Not only does this ensure that the child’s best interest is taken into account, but it prevents parents or guardians from using the money in ways that do not benefit the minor. Ideally, setting up a structured settlement for a minor in this way will give them the financial support they need until they reach adulthood.

Formation of Structured Settlements for Minors

As previously stated, the responsibility for approving the minor’s settlement falls on the judge in the case. The judge will likely take the following things into consideration when determining the best way to set up the minor’s settlement:

  • current need
  • future loss of earnings
  • future needs
  • the minors disability, if any 1

Not only are these settlements designed to support the minor until he or she reaches adulthood, but actually continue supporting them as they age. This includes allocating funds for major expenses such as college tuition, car or mortgage payments, and general cost-of-living funds.

Ensuring Proper Use of Settlement Payments

In some of the most unfortunate cases, a minor is entitled to compensation due to the wrongful death of his or her parents. When this happens, the court must decide where payments are sent until the child reaches adulthood. The court’s decision will vary on a case-by-case basis, but ultimately appoints one of the following entities to control funds:

  • court-appointed guardian
  • court-monitored bank account
  • trust fund. 2

Advantages for Minors with Structured Settlements

When a minor receives compensation in the form of a structured settlement, the court does everything in its power to ensure the proper use of funds while maximizing opportunity for the child. Additional benefits of structured settlements for minors include:

  • Structured settlements are not taxed as income, despite earning money on interest.
  • The return rate is fixed so that payments cannot decrease for any external reason.
  • Structured settlements are regulated by insurance companies in all 50 states.
  • The money is protected until the child reaches adulthood. 3

Contact J.G. Wentworth

With more than two decades of experience purchasing future payment streams, J.G. Wentworth is the country’s leading purchaser of structured settlement and annuity payments. To learn more about how we can help get you your money when you need it most, contact us today.

The above is some basic information on the topics, and is not a complete guide. J.G. Wentworth  is a purchaser of assets and does not provide legal, tax, or financial advice. Please contact independent professionals for legal, tax and/or financial advice.




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