Striking a Minor Chord: Best Settlement Options for Children

For all the right reasons, courts scrutinize claims involving minors with extra caution. By their very nature, these are complicated cases. There are often complex medical expenses to consider, concerns over the security of the settlement funds themselves, not to mention emotional issues for the child and family to deal with.

In cases involving a minor’s settlement, known in most jurisdictions as Minor’s Compromises, judges are likely to ask:

  • Is the minor receiving a fair settlement?
  • Will the money be wisely invested on the minor’s behalf?
  • Is there a concern that the parents or others will take, invest, or use the money for their own benefit?
  • Will the minor have access to all of the settlement funds at the age of majority, when he/she is both financially and emotionally unprepared a sudden onslaught of wealth?

We know that, even given disparities in state laws, there are generally three ways for minors to take their settlement funds: (1) the funds are placed into a court-ordered CD or blocked investment account; (2) the funds are placed into a Trust, managed by a bank or investment advisor; or (3) the funds can be used to purchase a tax-free structured settlement annuity.

We advocate for #3. Here’s why. Structured settlement proceed are always received completely tax-free and are guaranteed by highly rated insurance carriers and regulated by insurance commissioners in all 50 states. They are completely protected from investment and market volatility.

Structures also allow for great flexibility in designing a financial plan for the minor. We can specify monthly or annual income, future lump sums, cost of living increases, and so on. We can target funding for events like college tuition, the purchase of a home, weddings, investment for a business, you name it. A thoughtfully designed structured settlement will also significantly reduce the risk of premature dissipation of the funds when the minor reaches the age of majority.

It’s no surprise that structured settlements, which provide unmatched advocacy for minors, are favored by the courts. They typically result in simplified and expedited court approvals.

Chronovo has prepared a detailed Compass Point on the subject of minors’ settlements for your review. Please e-mail Bill Wakelee at for more information about this topic, or to get a copy of our Compass Point on settling Minor’s claims.