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What is a Structured Settlement for a Minor?
January 31, 2025
4 min

A structured settlement is a specialized financial arrangement typically used to compensate individuals who have suffered personal injury, medical malpractice, or other legal claims. But what happens when the injured party is a minor? These settlements take on additional complexity and importance, designed to protect the child’s financial interests and ensure long-term financial security.

  • Medical malpractice claims.
  • Personal injury lawsuits.
  • Wrongful death settlements.
  • Workplace injury cases involving a minor.

Key characteristics

  • Periodic payments: Instead of receiving a large lump sum, the settlement is paid out in regular intervals over time. These payments can be:
    • Monthly
    • Annually
    • At specific life milestones (e.g., 18th birthday, college enrollment)
  •  
  • Tax advantages: Structured settlement payments are typically tax-free, providing a significant financial benefit to the minor and their family.
  • Court approval: For minors, these settlements require explicit court approval to ensure the child’s best interests are protected.

Customized payment structures

Courts and financial experts can design settlement payments to address specific needs:

  • Educational funding: Payments timed to coincide with college expenses.
  • Medical care: Continuous payments to cover ongoing treatment or future medical needs.
  • Living expenses: Gradual distribution to support the child’s basic needs.

Guardianship and management

Unlike adult settlements, structured settlements for minors involve:

  • Court-appointed guardians.
  • Strict oversight of fund management.
  • Requirements for transparent financial reporting.

Long-term financial security

Structured settlements for children can benefit them in a few different ways:

  • Prevents immediate fund mismanagement: Protects against potential financial misuse.
  • Ensures sustained support: Provides consistent financial resources.
  • Flexibility: Can be tailored to the specific needs of the child.

Psychological and emotional considerations

Structured settlements for minors also offer some emotional benefits:

  • Reduces financial stress on the family.
  • Provides a sense of long-term stability.
  • Helps mitigate the trauma associated with the initial incident.

Potential challenges and considerations

If you’re the legal parent or guardian of a child receiving a structured settlement, keep the following in mind:

  • Less immediate access to full funds.
  • Potential inflation impacts on future payments.
  • Complex legal and financial setup.

Thinking about cashing out?

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When to consider alternative approaches

Not all situations are ideal for structured settlements. Factors to consider include:

  • Total settlement amount.
  • Specific medical or educational needs.
  • Family financial situation.

Important considerations before proceeding

Structured settlements are not one-size-fits-all solutions. Each case requires careful, individualized consideration to truly serve the best interests of the minor involved.

  • Consult with a specialized attorney.
  • Seek independent financial advice.
  • Prioritize the minor’s long-term interests.
  • Understand all legal and financial implications.

Final thoughts

Structured settlements for minors represent a compassionate and strategic approach to financial compensation. By prioritizing the child’s long-term welfare, these arrangements provide a safety net that extends far beyond immediate financial relief.

Parents, guardians, and legal representatives should work closely with financial advisors, attorneys specializing in minor settlements, and trusted financial institutions to create the most appropriate settlement structure.

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Call us at 866-416-5118 to talk about your financial needs and what annuity payments you have coming to you. We’ll do the hard work and handle the rest of the process!

This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that you consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.

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What is a Structured Settlement for a Minor?

What happens when the injured party is a minor? These settlements take on additional complexity and importance, designed to protect the child's financial interests and ensure long-term financial security....

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