Minor settlement - adjusting for inflation

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Minor settlement - adjusting for inflation

Post by Hatigol »

I could use some help with a situation.

My child was involved in a motor vehicle accident (their fault and my child has fully recovered) and the other party is paying a settlement fee. Since the child is a minor, it will be deposited in a blocked account and available when the child turns 18.

Considering inflation, letting it sit in a money market account earning low interest rates might not be the most prudent option. Are there ways one can create an investment account, to invest these types of settlements, so they can appreciate at a better rate by investing in the market?

Thanks in advance.
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Re: Minor settlement - adjusting for inflation

Post by HomeStretch »

Welcome to the forum. Good news that your child has fully recovered.

The answer is likely state dependent. It likely also depends on the court’s blocked account definitions/restrictions and the financial institution that will hold the account.

What state are you in?
Do you have any of this information yet?
Do you have a choice of financial institutions to hold the account?
Will you be named guardian on the account and, if so, will you have investment authority?

What does your child’s attorney advise?

Once the account is in place, you should have a clearer idea of what the account can be invested in and whether you have the authority to direct the investments. What to invest in, if anything, is also dependent on your child’s age and how soon the money will be needed by the child after reaching the age of majority (for example, college costs at age 18 or a house at age 30).
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Re: Minor settlement - adjusting for inflation

Post by Lee_WSP »

In general, I usually advise a form of minor’s trust for settlement payments to minors. Sometimes the carrier is amenable, sometimes they aren’t.
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