September 19, 2017

Structured Settlements for Minors

Since minors cannot legally own bank accounts on an individual level, or enter into any type of contract, control of a child’s settlement may become a bit confusing.

The purpose of the settlement when dealing with minors is to protect the rights and interests of the minor. Since minors generally do not have much experience in dealing with money or their own finances they may be induced by others to inappropriately spend their settlement proceeds. We, at Vega Settlement Group, specialize in structuring settlements for minors in order to avoid such situations and create a fund for any future expenses the child might have due to the lawsuit. Judges will review the proposed settlement for fairness and to make sure that it is in the best interest of the minor.

The money that is deemed necessary to cover current medical and future expenses is placed into a liquid account, usually a bank checking or savings account, in order for the custodian to have easy access. Since a minor cannot individually own a bank account, a responsible custodian must be assigned to help the minor with the account until the minor reaches the age of majority. The rest of the money will generally be used to purchase a Structured Settlement annuity, which is a tax-free investment vehicle that provides a steady stream of income over a specified period of time while earning interest.

The best thing about these investments is that they are tax-free and prevent an individual from going on a spending-spree and purchasing unnecessary things.