[Transcript]

Hi, this is San Diego personal injury attorney Mark Blane, and we're talking about structured annuities today. I'm joined by Manny Valdez from Ringler Associates. Manny, how are you doing today?

Doing fine, thank you.

So, we're talking about child injury settlements in California. Now, we both know parents generally have two options: they can deposit into a traditional bank account, or they can choose what's called a structured annuity. What exactly is a structured annuity?

Well, a structured annuity is related to a tax code, specifically 104(a)(2). It deals with physical injuries. When a minor or an adult (in this case, a minor) receives distributions from a series of payments structured over time for their benefit, those payments are received tax-free, both from federal and state taxes. We get a settlement for a minor child and deposit it into a structured annuity with a secure, AAA-rated insurance company.

Yes, basically in California, most jurisdictions, and throughout the United States, everyone looks for at least an A+ rated carrier or better. Courts want the full protection that a financially secure life insurance company provides, so the financial ratings are critical. In fact, you will go to the hearing with the attorney to help explain the benefits of the structured annuity to the judge, won't you?

I will and I do, and I really prefer to do it. The judge’s time, the attorney’s time, and the parents’ time are critical. If I'm there, the judge can have any questions concerning the insurance company answered properly. It increases our chances of getting the settlement approved.

Number one is time growth. The money has to go into a blocked account for the child anyway, so it grows better with a structured annuity. That's one benefit. The other benefit is control of the funds.

Absolutely, and historically, it has been a problem when parents structured the payment to be distributed at age 18. Typically, the money would be spent immediately. Structured settlements give parents more control over the distributions over time, which helps the minor a great deal.

Exactly. This becomes more important if it's a larger settlement, so a structured annuity might be more crucial for parents to control past age 18, maybe until 21, 24, and beyond.

Absolutely. Remember, it is all tax-free distribution.

Thank you, that is important. It is really critical. You have time behind you and a generous distribution schedule, which puts the young lady in a great position to change her future. The parents are very excited about it. This would still work even without the time growth, even for a 16 or 17-year-old. We have another case where a 17-year-old is doing a structured annuity until she's 27.

Absolutely. Many people are not mature until they're 25 or 30 years old. Receiving distributions over time, even later, helps them in different ways. The benefit, regardless of the minor’s age, is always in the young person's best interest.

Awesome. And where are your offices located?

We are in downtown San Diego, with additional offices in downtown Los Angeles and downtown Las Vegas.

Alright, well, thank you very much for joining me today. I look forward to working with you on our next case together.

I look forward to it as well, thank you.

[End Transcript]

Why use a structured annuity for your child's injury settlement? Simple. You get three huge benefits: 

1) Time growth. The funds have to be deposited into a bank blocked account anyway until the child turns 18 (under California law). With an annuity structure, you can take advantage of an insuance company's investment portfolio over time in comparison with the low return of a bank's interest rate.

2) Control of the funds. Parent's can plan ahead with the settlement funds by picking what age their child receives the settlement funds. This, of course, depends on the amount of the settlement. Some parents would like to be prudent with the settlement funds. They would rather "structure" payment to their child on periodic dates. For example, instead of the child getting everything when they turn 18, they can structure their access to funds in segments through time. So the child can recieve a lump sum amount at age 18, then another at age 20, or 21, then another at age 25, and so on. All the while, they are taking advantage of growth because the longer the funds are in control of the insurance company they are still investing those funds for return on investment.

3) Maximizes net recovery. Remember, the structured annuity is an efficient investment vehicle so it will be growing with guaranteed payments much better than a bank's interest.

So for all three reasons above, it is a great way to help an injured child maximize their net recovery. Parents love it for all three reasons above, and so do the judges who have to approve a child's injury settlement in California if the settlement amount is above $5,000.00. I love it because I know the child is getting the best possible result and return for their injury. 

Settlements For Child Injury Cases Using a Structured AnnuityChild Injury in San Diego

The other way is via a structured annuity. A structured annuity is a great way to go with settlement funds for a child if the settlement is quite large, and the injured child is quite young at the time of the settlement. A structured annuity is actually a contract between a Triple A-rated insurance company that guarantees lump-sum payments to the child over time. You will get a much better rate of return using this vehicle as opposed to depositing settlement funds into a blocked bank account. With a structured annuity, the parents get to choose a plan to structure payments to their injured child through time. For example, instead of getting a huge chunk of money when they turn 18, which is generally not a good idea, the injured child gets a small portion at age 18, then at age 20, for example, they get another lump sum payment, and another at age 22, 25, 28, or 30, and so on. The longer the structure, the better the rate of return because the child is utilizing that time element. 

So, the judge's third role is to approve either a bank blocked account or a structured annuity, for the injured child. Once the three roles the judge reviews and approves, he or she then issues a court order for the California child injury settlement. If it is a blocked account approval, then I use that to obtain the settlement funds and help the parents open a blocked account. If it is a structured annuity approval, then I use that to fund the structure for the child on behalf of the parents.

San Diego Child Injury Attorney That Is Here To Help You and Your Loved Ones

Would you like to know more? Perhaps you, or someone you know, has a child injury case, and you or they need more information. Be sure to download my FREE Ebook entitled "Justice for the Injured Child" for more information. Or, you can contact me by using my convenient online contact form. Or, you can simply call me at 619.813.7955, or via email at mark@blanelaw.com.