How Structured Settlements Work in The case of Minors:

Earlier when there were no structured settlements, the minors which were involved in accident, personal injury and other types of cases with cash awards were usually granted lump sum amounts. As they were minors and were not legally able to accept these payments, the money was given to the parent or guardian. It looks like a good sensible deal. However, this had many problems.

One of the problems was that no rules existed for the adult to spend the money only for the minors needs. This resulted in a lot of adults spending this money which was meant for the minor on services or items for themselves. The purchased items often did not related to the responsibilities which the court had awarded, or the money was spent very irresponsibly.

To help get around this problem, structured settlements were introduced. Only some amount of money was given per payment. The idea was that the adults would spend this money in a more responsible manner, as there would be no temptation of a large lump sum.


The Court has the say and Restricts Guardian Adults:

As minor children cannot control the funds directly, the courts try to provide them some control over the finances from any lawsuit. It is now the responsibility of the court to determine the fairness of settlement amount, and also how the funds would be administered and divided.

The trust funds and the guardianships are both still used, and they have proven to be viable options for the administration of the funds as a result of a settlement. However, the structured settlements are now a more preferred option as they help to safeguard the financial security of the minor in question. Following are some other reasons:

  • Structured Settlement are free of tax
  • They enjoy flexible schedule
  • They can provide financial terms which are favorable.
  • They can provide protection from those adults who would irresponsible spend the money or without keeping in mind the actual needs of the child.

In case the child is below the 18 years on the finalization of the structure settlement, the terms will remain the same for the whole life of that annuity. It is mostly the case as terms of settlement are drafted during first notification period between the plaintiff and the defendant.

There are almost unlimited payment structures and options for structured settlements. A number of options are available to make sure that the minors have a steady income for their life. This includes lump sums and small payments for a time period and much more. The settlement amount may also be designed to increase over a period of time to grow with the increases in living costs.


Structured Settlement Transfers Which Involve Minors:

As minor children cannot control the funds directly, courts try to provide them some control over the finances from any lawsuit. It is now the responsibility of the court to determine the fairness of settlement amount, and also how the funds would be administered and divided.

The trust funds and the guardianships are both still used, and they have proven to be viable options for the administration of the funds as a result of a settlement. However, the structured settlements are now a more preferred option as they help to safeguard the financial security of the minor in question.

In case the minor is under the majority age (which is determined by the State of residence) and the person wishes selling all or some of the structured settlement, it is important to determine that the transaction is the best option for that child. In order to assist with the transfer, usually the court will give appoint a guardian ad litem. This is an expert who will be reviewing the case and providing his opinion about the benefits of that transaction. The process will delay the transaction.