The January 28, 2015 blog discussed personal injury damages in Arizona. The January 24, 2015 blog discussed wrongful death damages in Arizona.
In Arizona, a minor, a person under 18 years old, may have a personal claim. Many of these claims arise from automobile collisions, caused by negligent drivers. When the case is settled with the other driver’s insurance company, the minor’s claim must ordinarily be approved by the Probate Court, a division of the Superior Court.
The Probate judge will assess whether the settlement is fair, the Court will approve the payment of attorney’s fees, costs and medical bills. The remaining funds will be required to be placed in a restricted bank account, wherein no withdrawals are allowed without a court order. The bank funds, a lump sum, are accessible to the minor, through a court order, when the minor reaches the age of 18.
If the size of the personal injury settlement for damages is substantial the Court may approve a structured settlement or an annuity paid for by the responsible insurance carrier. The structured settlement may provide for monthly, yearly, or lump sum payments to the minor, starting when he or she reaches the age of 18. Payments usually extend over a number of years, the number of years will vary from case to case.
There are worthy aspects to structured settlements. There are tax advantages, the settlement funds are not taxable and interest accrues tax free, over a period of years.
Since payments are made over time the amount paid out through years is often significantly greater than the actual cost of the annuity policy or the actual amount of the settlement.
Payments can be customized and structured to provide payments for future educational, housing, medical, and other expenses.
Another advantage of a structured settlement is that the funds may not be obtained and spent all at once, versus what can happen when a minor gets all of his funds in a lump sum, at age 18.