Structured Settlements for Minors:
What Parents Should Know

When a minor is injured and receives a settlement, the financial decisions parents must make are both sensitive and significant. Unlike adults, children lack the legal authority to manage large sums of money or plan for long-term financial security. That responsibility often falls on parents or guardians—along with the courts—and one of the most protective, flexible solutions available is a structured settlement.

Structured settlements are not just a financial tool; they are a pathway to stability, security, and peace of mind for families navigating the aftermath of serious life changes. Here’s what parents need to know when considering a structured settlement for their child.

Why Structured Settlements Make Sense for Minors

A structured settlement provides tax-free payments tailored to a minor’s future needs. Recognized by federal law since 1983, structured settlements are particularly well-suited for minors because they prevent a young adult from receiving a large lump sum at age 18—an age at which most individuals are still learning basic financial management.

Instead of a one-time payout, a structured settlement offers a customizable schedule of payments—monthly, annually, or in lump sums at specific life stages—funded by highly rated life insurance company annuities. These annuities are among the safest investment vehicles available, and they come without ongoing management fees or market risk.

Common Payout Uses

Parents can work with a structured settlement consultant to design a plan that aligns with anticipated milestones, such as:

– Tuition payments for college or trade school
– Down payment for a home
– Funding to launch a business
– Regular living expenses, such as rent or vehicle costs
– Funds earmarked for future medical or therapy needs

Payments can begin when the child reaches legal majority (typically 18 or 19), or be distributed gradually to support long-term goals.

Alternatives: Pros and Cons

While structured settlements are often the preferred choice, parents may encounter other options:

Court-Protected Blocked Account: These accounts hold the entire settlement amount in a restricted account until the minor becomes an adult. They may earn minimal taxable interest, and the full balance becomes available at once when the child reaches majority. This approach offers limited growth and no structured oversight.

Trust Account: A trust—such as a pooled special needs trust or a minors’ trust—can provide more flexibility and oversight. However, trusts are subject to investment risks, ongoing management fees, and potentially taxable income. In some cases, courts may still allow early access once the child becomes a legal adult.

According to Secured Futures, a minor’s trust can be beneficial when long-term management is needed for significant settlement amounts. The trust ensures that distributions are made in the minor’s best interests, not their whims or the pressures of others. These trusts often require a corporate trustee and strict court oversight, adding a layer of accountability and financial stewardship not present in other options.

The Role of the Court

Because minors cannot legally contract or make binding financial decisions, most jurisdictions require court approval for any settlement involving a child. Judges prioritize the child’s best interests and typically lean toward structured settlements for their long-term safeguards and stability. In fact, courts allow immediate access to funds only in extreme cases while a child is still a minor.

Why Professional Guidance Matters

Choosing the right financial strategy for a minor’s settlement is not just about numbers. It’s about building a secure future. That’s why working with a knowledgeable structured settlement consultant is essential.

“Helping families protect a minor’s financial future is one of the most important roles we serve as settlement consultants. A structured settlement isn’t just a financial solution—it’s a promise that those funds will be there when they matter most.”
— Connor Kennedy, Ringler Broker

Final Thoughts

Parents facing a settlement decision on behalf of their child are not alone. Structured settlements offer a flexible, secure, and tax-advantaged way to ensure that a child’s compensation truly serves its purpose—supporting their growth, well-being, and success far into adulthood.

Whether planning for tuition, a down payment, or basic living expenses, a structured settlement provides families with control, clarity, and comfort amid uncertainty.

For more information or to speak with a Ringler consultant about your specific situation, visit ringlerassociates.com.