Structured settlement for minors is a legally binding financial arrangement that ensures the monetary compensation awarded to a minor is safeguarded and disbursed in a controlled manner. This type of settlement arises when a minor is awarded a sum of money through a lawsuit, inheritance, or insurance claim. It aims to protect the interests of the minor and provide long-term financial stability. One example of a structured settlement for minors is a personal injury claim. If a minor is injured in an accident and a court awards compensation, the settlement can be structured to provide monthly or annual payments until the minor reaches a certain age, typically 18 or 21. This ensures that the minor receives a steady income to cover medical expenses, education, and other essential needs. Another example is an inheritance settlement for minors. In the unfortunate event of a minor inheriting a significant sum of money, a structured settlement can be established to manage the funds. The settlement may include regular payments, or an annuity, to be disbursed at specific intervals until the minor reaches' adulthood. Insurance claims also often involve structured settlements for minors. If a minor is a beneficiary of a life or accident insurance policy, the settlement can be structured to provide regular payments or a lump sum at a predetermined age, allowing the minor to secure their financial future. In summary, structured settlements for minors are designed to protect the financial well-being of a minor involved in legal cases, inheritances, or insurance claims. Common examples include personal injury claims, inheritance settlements, and insurance claims. These structured settlements ensure that minors receive their compensation in a controlled manner, providing stability and financial security throughout their underage years.
Structured Settlement For Minors Examples
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Most courts in most jurisdictions allow settlement funds for a minor to be placed in a structured annuity rather than a blocked account (that the minor client will receive at age 18). Usually, these structured settlement annuities are set up to fund the minor's college expenses.
Most children won't spend a large lump sum of money responsibly. An annuity gives your child regular payments for the rest of their life or a specific period. This helps ensure the money is spent wisely, and they won't face financial distress.
For example, if you were involved in a car accident and were seriously injured, you may choose to sue the driver who was responsible. If the court finds in your favor, you may be awarded compensation. Rather than making a lump sum payment, the defendant may negotiate a structured settlement instead.
Allowed by the US Congress since 1982, a structured settlement is: A completely voluntary agreement between the injured victim and the defendant. Under a structured settlement, an injured victim doesn't receive compensation for his or her injuries in one lump sum.
If you have a structured settlement in which you receive your personal injury lawsuit award or settlement over time, you might be able to "cash-out" the settlement. To do this, you sell some or all of your future payments in exchange for getting cash now.