Structured Settlements: How Parents Can Protect Their Child’s Money
When a minor receives money from a lawsuit settlement, parents often wonder how to manage these funds responsibly. A structured settlement offers a proven way to protect your child’s money, allowing it to grow over time while preventing common pitfalls that come with large lump-sum payments. These court-approved arrangements use annuities from trusted insurance companies to distribute settlement funds according to a schedule designed specifically for your child’s needs.
This approach gives families control over when and how money reaches their child, while offering important legal protections. Whether your child’s settlement comes from a personal injury case, medical malpractice claim, or other legal matter, understanding how structured settlements work can help you make the best decision for their financial future.
At William D. Shapiro Law, Inc., our personal injury lawyers in Orange County have been helping California families for decades. When your child is hurt, you need a law firm on your side that can help you protect their future at every turn. Call us at 909-890-1000 now.
How Structured Settlements Help Money Grow
A structured settlement places your child’s settlement funds into an annuity with a top-rated insurance company like MetLife, Pacific Life, or USAA. During the years before your child turns 18, this money doesn’t just sit idle. The funds grow tax-free through guaranteed interest rates built into the annuity contract.
This growth happens automatically without any management fees or investment risks. Unlike a savings account earning minimal interest or stock market investments that can lose value, structured settlement annuities provide predictable, steady growth. For a settlement received when a child is young, this compounding effect over many years can significantly increase the total amount available when they reach adulthood.
The tax-free nature of this growth is particularly valuable. In most other investment scenarios, you would pay taxes on interest or gains each year. With structured settlements for personal injury cases, both the growth and the eventual payments remain tax-free, meaning every dollar stays working for your child’s benefit.
Built-In Protection When Your Child Turns 18
One of the biggest concerns parents have about settlement money is what happens when their child becomes a legal adult. An 18-year-old with sudden access to a large sum of money may lack the experience to manage it wisely. Structured settlements address this through spendthrift provisions that protect young adults from making impulsive financial decisions.
These provisions prevent creditors, predatory lenders, and even the recipients themselves from accessing the full amount at once. The money continues to pay out according to the agreed-upon schedule, even after the minor reaches adulthood. This means your child receives regular, manageable payments rather than a large lump sum that they might quickly deplete.
Key protections include:
- Payments continue on schedule regardless of outside pressure or requests
- Creditors cannot seize future payments to satisfy debts
- The structured settlement cannot be sold or borrowed against without court approval
- Recipients learn to budget and manage money through regular payment experience
You Control the Payment Schedule
Parents and guardians work with their attorney to design a payment structure that fits their child’s future needs. You can set up the payments however makes the most sense for your family.
Some families choose monthly payments starting at age 18 to help cover living expenses during college. Others prefer larger lump sums at ages 25 and 30 when their child might be buying a home or starting a business. You can also combine these approaches with regular income plus bigger payments at specific ages. Some families delay all payments until age 25 or 30, giving the money more time to grow while their child learns financial responsibility.
The payment schedule you choose becomes part of the court order. Once it’s approved, the structure stays in place to protect your child’s best interests at each stage of their life.
Working With Trusted Insurance Companies
Not all insurance companies offering annuities are equally reliable. Structured settlements for minors use only top-rated insurers with proven track records of financial stability and claim payment. Companies like MetLife, Pacific Life, USAA, and other highly rated carriers have the financial strength to guarantee payments for decades.
Your attorney will check the insurance company’s ratings from independent agencies like A.M. Best, Standard & Poor’s, and Moody’s. These ratings show which companies have the financial stability to make payments over the long term.
Your Attorney Works for You, Not the Insurance Company
Some parents worry about conflicts of interest when setting up structured settlements. It’s important to understand that your attorney represents only your family’s interests. Orange County personal injury attorneys receive their fee from the settlement amount before the structured settlement is purchased, and they earn no commission or ongoing benefit from the annuity itself.
This arrangement keeps your lawyer’s focus where it belongs, on getting you the best settlement terms and designing a payment structure that truly serves your child’s needs. The attorney’s job is to negotiate the settlement amount, advise on the best payment structure for your situation, ensure you work with a highly rated insurance company, and make sure all court approval requirements are met properly.
Why Courts Prefer Structured Settlements
Judges regularly encourage structured settlements for minor settlements, and many courts require them for settlements above certain amounts. This isn’t arbitrary. Courts have seen too many cases where lump-sum settlements disappeared quickly, leaving young adults with nothing despite winning significant legal cases.
A structured settlement means that the child’s interests are protected long-term. To help achieve this, the courts will review the proposed payment schedule, verify the insurance company’s financial strength, and confirm that the structure serves the minor’s best interests.
Call Our Orange County Personal Injury Law Firm Today!
If your child has gotten hurt, you need to speak to an experienced injury lawyer immediately. At William D. Shapiro, Inc., we’ll talk with you about whether a structured settlement makes sense for your situation.
Call William D. Shapiro Law, Inc. at 909-890-1000 to talk about what happened or fill out our confidential contact form.
William Shapiro has handled catastrophic injury/wrongful death actions for over 4 decades obtaining numerous seven and eight-figure verdicts and settlements. Honors include: 2022, 2016 and 2013 OCTLA “Top Gun” TLY; 2022 CAOC TLY Finalist; 2018 “Lifetime Achievement Award” Western State College of Law, 2021 & 2017 Best Lawyers, Lawyer of the Year; 2016 WSBCBA “TLY”; 2015 CAL-ABOTA “TLY”; 2014 “TLY” Consumer Attorneys of CAOIE; 2011 “Hall of Fame,” Western State College of Law; Fellow, American College of Trial Lawyers; International Academy of Trial Lawyers; International Society of Barristers; Diplomat, American Board of Trial Advocates (ABOTA); National Board of Trial Advocacy; specialist in Trial Advocacy, State Bar of California; “Best Lawyers in America” and “Tier 1 Best Law Firms” U.S. News; AV Preeminent, Martindale-Hubbell; SuperLawyers; Past President of: San Bernardino/Riverside chapter ABOTA; San Bernardino County Bar Association; Consumer Attorneys of Inland Empire; The Joseph. B. Campbell American Inn of Court; Consumer Attorneys of California; IE ; National Sec of ABOTA, Adjunct professor, Western State College of Law. Learn more here.