What happens when a child receives money from a legal settlement?
Whenever a young child receives a financial settlement, the potential for financial fraud exists. Minors don't have the same rights as adults when it comes to sex abuse settlements. And they cannot enter into any agreements on their own. As a result, this means that they can’t bring lawsuits, make settlement decisions, open bank or investment accounts, fund annuities, or purchase real estate. As a result, a competent adult must perform these acts on the minor's behalf.
Thankfully, the courts in California supervise sex abuse settlements made to minors. Furthermore, court orders are necessary to approve all forms of sex abuse settlements with minor plaintiffs.
The Court's Role in Protecting Children in Sex Abuse Settlements
Malfeasance (the misuse or appropriation of settlement money intended for a minor) may occur at the hands of the minor's parents, friends, relatives, or other financial predators. As a result, monetary settlement payments to minors in California receive protection by a court process called a petition for minor’s compromise of settlement. This process requires a judge to grant an order to the minor approving the monetary settlement and monetary expenditures. In the case of trusts, the money is under the supervision by the probate division of Superior Court.
Settlement payments to minors may take the form of any of the following:
- Irrevocable trusts and special needs trusts managed by professional trustees. The terms of the trust require approval by the court. They are for the sole benefit of the minor, including healthcare fees, psychiatric care, financial support, and education-related costs. Trusts may also set aside money for the beneficiary's later use. This includes college tuition, the purchase of a home, or long-term investments.
- Blocked accounts prohibit the withdrawal of money until the minor turns 18, unless a court order is obtained.
- Fixed annuities which pay on a fixed and predetermined schedule and which cannot be altered without a court order.
- Fidelity bonds to protect against loss from fraud or malfeasance against the minor’s assets.
Our Child Molestation Attorneys Help Protect Kids From Sexual and Financial Predators
The child molestation attorneys at Corsiglia McMahon & Allard use a team of experienced trust attorneys, trustees, and financial professionals to protect our clients. These professionals ensure that settlement monies are used for the sole benefit of the minor plaintiff. As a result, sex abuse settlements are frequently used to purchase annuities for lifetime income payments. And to open accounts for college savings or to establish trusts which provide for the health, financial support, and education of the minor.