The settlement for your child will be court approved. The judges role in most jurisdictions is to assist in the determination of the settlement s fairness and to safeguard the funds until your child is an adult. The rate of return on the protected accounts is usually quite low, typically equivalent to a savings account. At age 18 your child assumes complete control of the money, in a lump sum distribution. Many parents are concerned with the responsibility of their child managing all of the money at age 18.
Statistics show that most settlements are spent within a year or two.
Even a financially responsible child can make mistakes. A 142 Trust for minors could be used for larger sums of money. However, the costs of implementing the trust and on-going corporate management fees eat away at the principal. In addition, all sums must be distributed by age 25. A Structured Settlement solves many of these problems.