Minor’s Cases: Why a Structured Settlement Can Be a Good Fit

For cases involving minors, placing the settlement money into the court registry or a blocked bank account may not be the most beneficial for the client.

Problems with Court Registry & Blocked Accounts

First, the funds in the blocked account will earn little-to-no interest from the date of the settlement until the child turns 18 years old. Using a blocked account results in a missed opportunity to grow the value of the settlement funds over many years.

Second, once the minor turns 18, he or she has unrestricted access to the entire amount of the settlement. Many parents may not want their children to receive a big chunk of money at that age. Too often, this money is quickly squandered and dissipated.

Alternative Option: Structured Settlement Annuity

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. In addition, lump sums can be paid at ages when the minor is more likely to make responsible choices with the funds. 

Most courts are familiar with structured settlement annuities. They generally approve these requests. (Also, most parents prefer using a structured settlement annuity over the court registry option.)

If you have a minor client and have questions about how using a structured settlement annuity might increase the total value of the settlement and protect the funds from being dissipated once the minor turns 18, please feel free to reach out to us.

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