Structured settlements are financial investments awarded as restitution in personal injury or wrongful death lawsuits. They can be presented as a one-time lump sum, but structured settlements are usually disbursed through periodic payments due to their large amounts.
These large settlements can secure a higher quality of life for their owners. This is specifically true for minors who look forward to a future of higher education, a down payment on a car or purchasing their first home.
However, until they reach the age of 18 to legally manage their settlement money, there are rules in place to protect minors’ financial security.
Court Protection for Minors
There have been cases where settlements were provided as a lump sum. But access to a large sum of money can be tempting for parents or guardians meant to protect it. For that reason, personal injury settlements are typically set up as a structured settlement to prevent premature access and frivolous spending.
The legal system is protective of a minor’s financial security and requires court approval prior to awarding a settlement. Courts are responsible for dictating:
- How the settlement is awarded
- How the money is spent prior to minors reaching the age of majority
- Whether or not the settlement value is fair
It’s the judge’s job to properly safeguard the funds and prevent guardians and minors from inappropriately spending their settlement award. If provided in a large lump sum, settlements are placed in a protected account until minors reach 18 years old and can assume full control over the account.
- Minors are awarded the value they are due
- Money is invested properly to grow over time
- Money is protected from improper use or individuals seeking personal gain
- Minors cannot spend the settlement money all at once
- The settlement has long-term use