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.