I want to share a key part of our practice with you. We’re having serious conversations with our clients about settlement funds for minors in this economy. Will they go to college? What happens to financial aid? Will they be mature enough at 18 to handle the money? How does a parent prepare their child for significant money? Should the settlement monies be used for college? Or, should the assets be allowed to grow in order to assist paying off college loans? All real and tough questions we handle daily.
Interest rates are at a historical low. Restrictions under typical court rules governing guardianship accounts combined with their paltry rates, leave parents and legal guardians hard pressed to find good, workable solutions. Here are some of our thoughts.
We all know structures can protect minors at age 18, and it’s one of the only ways to stretch the funds beyond age 18 or longer. We know periodic payments can be pointed to a trust, preventing the sale of the structure upon turning 18, and that most courts are comfortable with them. Although structuring provides some protections, it is inflexible, and locking into a fixed interest rate this year may not be the only option to consider.
In light of this, we often recommend the use of a pooled minor’s trust. These trusts do not require attorneys’ fees associated with drafting a private trust. Additionally, the pooled trust significantly reduces the ongoing professional trustee’s fees and minimums. The trustee maintains control over disbursements during the beneficiary’s minority, and will collaborate with parents or legal guardian’s at the age of majority to decide on whether to continue the trust. This ensures that sound financial decisions are made throughout, all of which courts and judges find to be an integral part of any settlement plan.
We can help your clients evaluate their options and determine whether a private or pooled minor’s trust is best. Navigating these issues on a $75,000 recovery can give any trial lawyer a headache. While we understand that not every case is a big case, we understand that every case deserves expert assistance in planning.
If you want to discuss this further, or you have a case you think could benefit from our services please call us. We are paid by the financial providers we place business with, so there is never a cost to you or your client for our involvement.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).
3 Comments
Wayne Parsons
Thanks for explaining this to the public John. I have seen what great things can be done for kids with the help of companies like yours. I know that you do a lot of good in my state of Hawaii. I also know that you and your staff show up to help in community activities. Most important is for attorneys to be aware of the opportunities. I have heard many sad stories about attorneys not properly advising their clients about these matters. Keep up the good work!
Mark Bello
This is a very important issue and I hope this article gets wide distribution. When I practiced law, I very rarely, if ever, resolved a child's portion of recovery proceeds without a structure. Back then, there were very few companies out there that had the plaintiff's interest in mind and you were forced to try and calculate the numbers with alternate professionals or "trust the insurance company" (oh my God, did I really just say that?!). Thanks, John, for this excellent article; welcome to the Injury Board Blogosphere.
Mike Bryant
Great information and really gets to the heart of protecting the child's interest.
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