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Structured Settlement Child Support
Structured Settlement Child Support makes sure that the wellbeing of minor children are protected by law. The courts take on the role of making sure that children have access to the basic-rights as all of us, such as: food, shelter, health, and education. When divorce rears its ugly head, the courts will place the emphasis on the child’s future, and will be considered a high priority when the discussion turns to financial settlements.
The child support requested must be enough to take care of the child’s requirements and that it will be used exclusively for that purpose. If the settlement calls for a lump-sum payment, the court may mandate that the funds be placed in a protected-account. This would mean that the funds are frozen until the child reaches legal age, which is different amongst the states.
Can The Parent Get Full Control Over The Funds?
The funds will be taxed yearly on the interest if the total surpasses a set cap. These protected accounts usually achieve the same rate-of-return as a savings-account. Parents always make the attempt to gain full control over the management of the funds, but the courts frown on this concept. There have been many studies that show that most such cash settlements for the kids are non-existent within 5 years.
The structured-settlement affords the most protection for the minor child. One of the parents may be under a court’s order to pay child support, but that may never come to fruition, or the parent may skip town to avoid the payments. When a structured settlement is employed, there is no chance of a missing payment.
Everything is considered in advance of the settlement. The child will be taken care of until they become eighteen or older, and in advance. An annuity will be purchased, and the payments will be made by a large Life Insurance Company. The custodial parent will not have the opportunity to go on a shopping spree.
Cashing Out For A Lump Sum Now
If the custodial parent tries to cash-out of the structured-settlement, they will have to convince a court that it is in the best interest of the child. Each state has its own Structured Settlement Protection Act, (SSPA). The court will make sure that the guardian parent has a source of income and does not have a need to rely on the funds from selling the settlement.
Before approving any cash-out, the court takes into consideration not only the medical needs of the minor-child, but all the other opportunities that a child could enjoy, such as: educational requirements, food, clothing and shelter. There could even be provisions for expenses of vacations, and for extra curricular pursuits.
Before the sale of a settlement would be approved, documented-proof of the guardian’s income must be provided. The grounds for the Petition to sell for a lump-sum of cash must be valid, and the court must be convinced that the reason for selling now, must be more important than the security for the future of the child that it provided. This is a basic introduction about structured settlement child support.