Protecting a Minor’s Settlement Proceeds with a Settlement Annuity
Does your case involve a minor? As you are aware a judge in most jurisdictions will assist in the determination of the settlement and settlement funds when you have a personal injury or wrongful death case where one of the claimants is a minor. In most of these cases there are a couple of options to consider for the settlement funds:
The first option is a single lump sum cash payment. Most judges will require this payment to be put into a protected account. The guardian will need to keep an accounting of the funds and report any income gained on these funds. In addition, an annual accounting may be required for the Court. When the child reaches the age of majority they will then get complete control of the funds.
The second option is a structured settlement annuity. This is set up at the time of settlement and presented to the Court for their approval as well. The funds are placed with a life insurance company and provides for specific dollar amount payments on specific dates as agreed in the Settlement Agreement and Release.
Why not provide the opportunity to plan for the minor’s future with no further record keeping or cost? Many parents and/or guardians are concerned about what will happen with the money once the minor attains the age of majority and gets control of the funds with either option. Statistics show that within a couple of years, the money will be spent.
A structured settlement annuity’s income tax free periodic payments can be scheduled to coincide with or provide for college tuition, payment of future medical needs and retirement planning, and other life care events. They offer dependability and help ensure that the money is not squandered or lost. These annuities also provide competitive returns with low risk (typically better than bank savings accounts or Registry of the Court) and relieve the individual of the burden of money management fees and investment decisions.
There may be instances that a minor may have a need for their settlement proceeds immediately to satisfy current medical costs, educational costs or special needs services. If there is that need, a combination of lump sum cash and a structured settlement annuity should be considered.
Jeffrey Klugerman is a Structured Settlement Consultant with Delta Settlements in Fort Lauderdale, FL. He can be reached at 954-349-2033 or firstname.lastname@example.org