Structured Settlements For Minors

With today’s low interest rates, sometimes it makes little or no sense to structure a portion of a personal injury settlement. If a case settles for a particular amount, it is always advisable to consider whether structuring a portion of the settlement money into an annuity by way of a tax free investment might be in the best interest of the client. When minor children are involved, sometimes investing in a long term annuity can not only protect the corpus of the funds but also provide a stream of income either during the child’s college years (or beyond) where such funds can be made available for a down payment on a home, for future medical expenses and/or for other financial needs. Sometimes, when the clients are unsophisticated in financial matters it might be best to invest in tax-free annuities so that the client does not have to worry about squandering the corpus or otherwise investing it with those who might prove to be untrustworthy. The amount of a structured annuity is fixed and the payments will be made particularly if an A++ rated company is selected as the annuity provider.
Interest rates today are historically low and therefore the amount of annuity investments verses traditional investments is not as attractive as it once was. Nonetheless, we continue to advise certain clients to consider annuities because depending upon the age of the individuals involved and/or their financial sophistication, a long term annuity can still have benefits. The annuity benefits are not taxable in the future when they are paid whereas interest on any investment can be taxed which is obviously a reason to consider structuring a portion of a personal injury settlement in a serious injury context. Again, as is always the case for any serious injury matter, experienced counsel should be conferred with in order to make the best decision in any particular case.