Insurance settlement

[3nglishteacher]

I confess, I lurk. I come for inspiration and am in awe of the creativity and common sense of all who post here.

I need some of that pragmatism for a situation that I can't really discuss with family or friends. My daughter (15 y/o) is about to receive a sizeable settlement for an auto accident. Our financial situation is fairly stable (if that's even possible to say in this economy) but we have consumer debt we're trying to whittle down and a huge mtg. that worries me b/c DH is 57 and in so/so health.

What is the ethical, responsible thing to do w/ her money? Save and invest every penny in her name since it IS her money, her trauma? (Btw, she's made a complete recovery, thank God! - no lasting anything, physical, psychological, etc. Been checked out from top to bottom by every specialist known to man and child. She's a very lucky girl.) Has anyone been in this situation before?

Thanks!

 

[cjparker]

I have not been in your exact position, but I have a daughter who was very very ill for several months. The lost wages, gasoline spent driving to and from the hospital, money spent on convenience foods because there was only time for her, payment for unreimbursed medications.....it all added up to a big number.

My suggestion is that you discuss this with your daughter and let her know it is a confidential conversation between you and her. It is her money, but she's old enough to understand the financial impact her trauma had on the family. (not to mention the terror you must have felt while waiting to see if she was going to fully recover)

I don't see how she should be responsible for you big mortgage, but you might ask her about the consumer debt. I'm reading between the lines, but I think you know that you shouldn't be using her money without her express permission. I, too, would be tempted by a big $$$$ number to clear some debts, but they are not her responsibility. She is a family member, though, and may want to do something to assist with maintaining family financial stability. One thing that comes to mind is that maybe she could buy a life insurance policy on your hubby, to cover the mortgage if he becomes to ill to work. Talk to her; it is not your decision to make alone.

 

[FarmerChick]

hey teach!!!
lurker...LOL..come join the party!



for me, I would use SOME of the money. 15 yr old is still going to live with you and make more debt....haha.

but it would not be alot.

If we knew the amt. of money it would help. sizable means to me she will get a VERY good amt. and thru investing smart, have some cash in life to get thru school and get a great start.


yes it was her "hurt" but I would not discuss big finance and money payout with a teenager. I would just "take a bit and DO GOOD with it for the family----and tell her that she has X (a big amt. left) for her future.

now this is just me guys. everyone has their opinion.


so I would find my worst debt, use a bit to help the entire family, and get a great, but safe investment for the balance for her to have when older.


I would take a bit of the money but not sure of amt. again, so hitting the mortgage might be out, but paying down some consumer debt would help alot I am sure. With the emphsis of "take a little" and give her alot of investments for the future.




yes, it is hard not to go hog wild when big money is around. everyone would have your trouble also.

the word "sizable" needs to be considered. If BIG, then some is fine. Use your own judgement on how much a person needs thru this lifetime to get a great good healthy start in life.


we can only say what we would do.....you will find your right balance.

 

[noobiechickenlady]

I think cjparker gave very good advice.
You could put some of what she wants to keep in a 529 college savings fund. These are tax-advantaged programs, specifically for college savings. They are administered by your state agency, and depending on your state, might be tax-defered.

There are two different types offered. One is a pre-paid tuition, which are available in 13 states. The other is simply a savings account with a few more regulations.
http://www.collegesavings.org/advantagesOf529.aspx

I agree with Farmer's view as well... hmm, some of the debt is going to be from her injury, I would assume.
Yep, you gotta take all the options & figure out what best fits family needs & hers.

 

[ducks4you]

Yes, I have been in the situation before. Our two daughters, (19 & 24 at the time) were hit from behind, and the other driver totalled the car. (Youngest DD was stopped at a red light.) Fortunately, the injuries only required chiropractic care. DH (their father) is an atty and he handled the PI case. They asked for a reasonable settlement, in the low thousands$ which covered all liens plus pain and suffering, and the other driver's insurance co., payed for a new car to replace the almost brand new car the belonged to the older daughter. BTW, she works and is making her own payments on it, for whatever that's worth.
Oldest DD used the money to buy a laptop. Youngest DD used the money to pay for one college semester.
Driving is and has always been a PRIVILEGE, NOT a right. Therefore, when your 1,000 pound machine injures someone else because you were talking on your cell (that's how this accident happened, along with bad driving habits), you should feel the weight of it. Courts can only redress in one of two ways: your time taken away, your money taken away.
I TOTALLY believe in Tort reform with regards to caps on outrageous settlements given by juries. Don't be feeling guilty because her settlement was "sizable." Perhaps you could persuade her to open a savings or money-market account and let it earn some money until she is 18. Then, she'll be a legal adult and can decide what to do with it.

 

[DrakeMaiden]

I would either put it in a savings account for her to use on something important or some sort of college fund. JMO. It isn't very often you get a windfall, and I have found that if you spend it on something that you will appreciate for a long time . . . that is the best possible use.

 

[Dace]

Having teens, I would have to say that YOUR consumer debt is your responsibility, and I do not think it would be fair to pay any of it off with your daughter's settlement.

I would set it aside for college and her own real expenses...not cell phones, cars or other frivolous things...not knocking Ducks4you, her girls were adults and made their own decisions. If it were me, I would use that money to set her up to move ahead in life and when she gets to the age of needing it (college) then other perks to make her life easier (car/cell/laptop etc) can be discussed. At this point she is too young to make those important decisions and I do to think it is fair to put the burden of adult financial obligations on a child.

That said......
Please don't hesitate to jump in more often

 

[Ldychef2k]

Wow, what a problem to have !

Well, if there are expenses incurred that were not covered by insurance, I would hope she would cover those with part of her settlement.

Who will be paying income taxes on the money?

As a teenager who has been through a big deal and is receiving a bucket load of money, no doubt she has fantasies about spending it. Not letting her have SOMETHING might create some problems, especially given her age. You have no right to a dime of her money unless she gives it to you, and if you do not make sure it is all earmarked for her one way or another, you might have legal problems.

If it were me, I would talk to her about the expenses that you may have paid out of pocket and offer her the opportunity to do the right thing. Make her aware of whatever income tax regulations apply, and if she cannot shelter the money she will have a rude awakening when half of it is taken from her.

Then I would tell her that as her parent you want her to place a large portion of the money in gold. I know that's probably a shock, but my belief is that gold is the most secure investment there is. Investing in this economy is risky, and there is more than a possibility that many banks and the FDIC may not remain solvent much longer. I would not risk losing that much money by putting it in the hands of anyone else but myself. But that's just me.

And finally, I would give her an allowance of whatever you determine is left after bills, taxes, and saving for the future. This can be until she is 18 or whatever age.....

Just advise, and a lot of ranting....

 

[old fashioned]

My boys (4 and 6 at the time) and I were rear-ended a few years ago. Luckily nothing too very serious, but all went for chiropractic services. The settlement was done in one lump minus prorated amounts for atty and chiro fees, based on each of our injuries and was paid to us in seperate amounts. I got some, each of the boys got some. Mine was paid directly to me, but for the boys the monies were set up in seperate trust funds by the court and atty to be paid when they are 18. (they've already spent it in wish lists 1,000x over HAHA) I didn't have much say about it at the time although I could have contested it if I could show good cause for the boys benefit. I chose not to, that way the boys will have a small nest egg to look forward too, it's safe and nobody can touch it.

I don't know about your situation or the laws in your area, but you may not have any say in the money matter. It may be that since it's her accident it's her money and the court may decide how the money is handled if she's under 18. She may not have access to it until she's legal age. Best of luck to ya.

With that being said........

 

[tinkarooni]

I will agree with PP. If your daughter is a minor the state laws may require the insurance company to get court approval for the settlement and the court may than require you todo what they say with the $$. Probably to make you put the $$ into a savings account. I am a claims adjuster and have done this plenty of times. Better ask your adjuster your working with if this is what will happen.

To answer your question....if my family couldn't eat or someone needed lifesaving medical treatment I might be inclined to dip into the settlement, but other than that I would save it for her future.

Good Luck!