When a minor (a person under the age of 18) is involved in a legal settlement—such as a personal injury claim or wrongful death case—Missouri law imposes specific requirements to protect the minor's financial interests. One key question is whether these settlements must be structured (paid out over time) or if lump-sum payments are permissible. This article examines Missouri's statutory framework, interprets the relevant laws, and explores the available options for minor settlements.

I. Legal Requirement for Structured Settlements in Minor Cases

Statutory Authority: Missouri Revised Statutes § 507.184

Missouri law does not explicitly mandate that all minor settlements must be structured. However, the court must approve any settlement involving a minor, and judges often prefer structured settlements to ensure long-term financial protection.

The primary statute governing minor settlements is Missouri Revised Statutes § 507.184, which states:

"When a minor or incapacitated person is a party to a settlement… the court shall approve the settlement and shall make such orders as it deems proper for the protection of the minor or incapacitated person, including the investment or deposit of the proceeds of the settlement."

While this statute does not explicitly require structured settlements, it grants courts broad discretion to impose conditions that safeguard the minor's financial future. Judges frequently order structured settlements to prevent mismanagement of funds.

Court Interpretation and Common Practices

Missouri courts generally follow these principles when approving minor settlements:

1. Judicial Oversight is Mandatory – No settlement involving a minor is valid without court approval.

2. Structured Settlements Are Strongly Favored – Courts often require structured payouts to ensure funds last until adulthood.

3. Lump Sums Are Possible but Rarely Approved – If a lump sum is requested, the petitioner must justify why it is in the minor's best interest.

II. Available Options for Minor Settlements in Missouri

When settling a case involving a minor, the following options are available under Missouri law:

1. Court-Supervised Structured Settlement

A structured settlement involves periodic payments over time, often through an annuity. Benefits include:

• Guaranteed income for education, medical needs, or living expenses.

• Tax advantages (structured settlement payments are typically tax-free under IRS rules).

• Protection against financial mismanagement by guardians.

Courts often require structured settlements unless a compelling reason exists for a lump sum.

2. Lump-Sum Payment (With Court Approval)

A lump-sum payment is possible but requires court approval. Judges may allow it if:

• The settlement amount is small (e.g., under $10,000).

• Immediate medical or living expenses justify the payout.

• The funds will be placed in a restricted account (such as a blocked bank account or trust).

3. Establishment of a Trust

If a lump sum is approved, courts may require a minor's trust under § 475.120 RSMo. Key features:

• The trust is managed by a trustee (often a parent or financial institution).

• Funds are released at specified ages (e.g., 25% at 18, 50% at 21, remainder at 25).

• Provides legal safeguards against misuse.

4. Blocked Bank Accounts (For Smaller Settlements)

For minor settlements under $25,000, Missouri law allows funds to be deposited into a blocked bank account under § 507.184(3).

• The funds are frozen until the minor turns 18.

• No withdrawals are permitted without court approval.

III. Practical Considerations for Parents and Attorneys

When is a Structured Settlement Required?

• High-value settlements (typically over $50,000) are almost always structured.

• Long-term care needs (e.g., medical malpractice cases) benefit from structured payouts.

• Court preferences – Some Missouri judges routinely order structures unless waived.

When Might a Lump Sum Be Approved?

• Small settlements (under $10,000).

• Immediate financial hardship (e.g., medical bills, housing needs).

• Parental justification (if parents can show responsible financial planning).

Tax and Public Benefits Implications

• Structured settlements are tax-free under 26 U.S. Code § 104(a)(2).

• Lump sums may affect eligibility for needs-based government benefits (e.g., Medicaid).

• Special Needs Trusts may be necessary if the child is disabled.

IV. Conclusion: Missouri Prefers Structured Settlements for Minors

While Missouri law (§ 507.184 RSMo) does not mandate structured settlements for minors, courts strongly favor them to protect the child's financial future. Lump sums are possible but require convincing justification. Parents and attorneys should expect judicial scrutiny and be prepared to propose a structured settlement or trust arrangement.

For legal guidance, consult an attorney experienced in Missouri minor settlement laws to ensure compliance and the best outcome for the child.

Citations:

• Mo. Rev. Stat. § 507.184 (Court approval of minor settlements).

• Mo. Rev. Stat. § 475.120 (Trusts for minors).

• 26 U.S. Code § 104(a)(2) (Tax exclusion for structured settlements).

This article provides general information and should not be construed as legal advice. Always consult an attorney for case-specific guidance.