Should They or Should They Not Get a Big Pile of Cash at Age 18?
That is the Question
Some surrogate judges think they should, even if parents or the infant plaintiff’s lawyer might not, citing case law in their states, which suggests that the child have access at age 18. This may lead to a settlement distribution (or if a structure is a approved, a structured settlement payment design) that is not prudent.
Consider a case in which child’s parent or parent’s have died with young children
- In reviewing structured settlement proposals that for example, could provide for annual payments to pay for college tuition from age 18-22, a judge could reject the plan on the basis of the case law and give an 18 year old already dealing with the sequelae from the loss of parents, who may not be mature enough to make the correct financial decision.
- Alternatively, the 18 year old may exhibit sudden money syndrome characteristics.
- This could lead to financial decisions that he or she may come to regret later on in life when they realize that they would have more than the few little baubles they have left if only there had been better decisions to begin with.
Sometimes the teenagers or young adults don’t realize what the money means (compensation for lost parental relationship and support) when they’re spending it. At least a structured settlement that includes a reasonable spreadout of payments (for college or other purposes) gives someone the time to learn from their mistakes without the risk of obliterating their blood money.
Someone I know contacted me in 2010 because he had gone through his up front cash obtained as an 18 year old as part of the recovery for the loss of his father on 9/11. Unfortunately, money that was intended to be used for college was instead lost in the stock market. Fortunately he had options because he structured a large portion of the recovery.
Back to the access at age 18 question…the fact is that there IS already access to a structured settlement at age 18 by virtue of the ability to factor the structured settlement?
Pladson Case (2005)
North Dakota Court denied Medicaid payments recognizing the ability to sell annuity payments (and the facility to sell them)
Indeed at least one state Court has recognized the ability to sell annuity payments (and the facility to sell them) in denying Medicaid payments. See Estate of Pladson v. Traill Co. Social Services, 2005 ND 213, 707 N.W.2d 473 “While the annuity, by its terms, cannot be assigned, there is nothing in law to prevent Ms. Pladson from contracting to sell the payments she receives under the annuity.
” An active market”
There is an active market for the sale and purchase of such “streams of income,” referred to as the factoring transaction market. In this market, sales and purchases are made of streams of income resulting from instruments such as structured settlement agreements, mortgage payments, lottery or casino winnings, estates, trusts, and annuities. I have enclosed, for your information, copies of printouts from websites for companies that purchase such streams of income, providing the individual with lump sum cash payments immediately”.
Pladson did not involve a structured settlement
Please note that while the Pladson case did not involve a structured settlement it illustrates that there is liquidity, if necessary.
That being said the transfer of structured settlement payment rights for cash requires Court approval to determine if such transfer is in the best interest of the person selling (and, if applicable their dependents). Therefore I submit to you that structured settlements offer the best of both worlds. One CAN achieve spendthrift protection and still have access at age 18, if necessary.
More information on Structured Settlements for Minors | What You Need to Know
Does “Pladson” Factorability of Annuity Payments Blow Up… May 8. 2006
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