The Settlement Alliance

Minors and Structured Settlements

Minors and Structured Settlements

Mar 10, 2017

Injury cases involving minors often involve the strictest settlement requirements. Because minors are considered unable to make their own financial decisions, courts typically lean towards conservative financial approaches. One of the most common options for handling a minor’s settlement proceeds is a structured settlement.

What is a Structured Settlement?

A structured settlement is a financial arrangement in which the defendant pays the settlement proceeds (per the settlement agreement) to a third-party assignment company. The assignment company then purchases a structured settlement annuity from a top-rated insurance company. The annuity provides periodic payments to the claimant (payment schedule terms are laid out in the settlement agreement).

How Can a Structured Settlement Help a Minor Claimant?

A structured settlement is an excellent option for most minor’s cases. It is 100% income tax-free (including any interest growth on the annuity), but more importantly, the interest rate and payments are fixed and guaranteed. That means that even when the market fluctuates, the minor’s annuity funds will remain stable. Also, unlike other investment vehicles or trust accounts, a structured settlement annuity has no ongoing fees or expenses. When used in a minor’s case, a structured settlement is typically arranged to begin making payments when the minor reaches the age of majority.

The flexibility of a structured settlement annuity is one of its greatest benefits. Payments may be made monthly, bi-annually, or annually, or in a series of larger lump sum payments. For instance, monthly payments could be scheduled to provide a stable monthly income once the minor reaches the age of majority. On the other hand, lump sums could be set up to pay for college or the purchase of a house.

Structured settlements have historically gained court approval faster than some other options for minors due to their reputation as a safe, reliable investment. Also, because the income stream does not change for a structured settlement, courts may not require reporting. If you were to use a trust or court account, on the other hand, regular income and expense reports may be required, as the court would want to determine that any distributions were made in the best interest of the minor.

Contact Us Today About Your Minor’s Case

If you are a plaintiff attorney who works with minor clients or the parent/guardian of an injured child, contact us today to learn more about how we can help. The Settlement Alliance works with law firms across the nation to assist minors and their families with choosing the best options for preserving settlement proceeds.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential