There is a special set of laws that apply when kids get injured. If they
are involved in an accident caused by another party they can receive monetary
damages. However, with few exceptions, payments are held up until they
are at least eighteen.
The minors can get their medical bills paid. Parents can be reimbursed
for out-of-pocket expenses. Occasionally the court might allow some modest
payment for something the child needs. But parents are not entitled to
The court will order a child’s money to be placed in a blocked account.
Another court order will be required to release the money. Usually these
accounts accrue only a small interest. The interest is subject to taxation.
The child is entitled to the entire sum of money on his eighteenth birthday.
Parents who are concerned about low interest rates and the release of the
entire sum of money when the child becomes eighteen have few options.
One option they may be able to work out is the creation of an annuity for
the child. Basically, rather than receiving a cash settlement an insurance
policy is purchased with the settlement proceeds.
An annuity can be set up so that a child receives payment over a number
of years beyond the age of eighteen. It can be designed to provide a college
fund and block grant to the child after he has reached maturity. The annuity
may also provide the benefit of a much greater interest rate without tax
liability. Courts generally approve such agreements.
To further protect the interest of the child, the courts require its approval
on a compromise & release to resolve the minor’s claim. Injuries
to minors tend to be treated more sympathetically by all parties. Even
the attorney for the minor will usually have a reduced fee.