Legal question, What happens when a judge grants a baby money?

Question

If a parent sues because a child gets hurt, and the money is put in the child's name, the parent is granted guardianship, at what age does the child gets the money if the parents don't give it to them? And the child is being taxed on the interest from it? At what age is the limit that they can use it "for the child"?

Answer 1

It depends on the state and the circumstances of the legal action. In some circumstances, the money will be given to the parent as guardian for the minor child. Guardianships typically terminate at age 18. Age 18 is a "magic age" because a person who is 18 is considered to be an adult for all purposes except for the ability to purchase alcohol.

Sometimes the money can be placed under order of court in a "sequestered savings account" in the child's name. Every such order shall contain a provision that no withdrawal can be made from any such account until the minor attains his majority, except as authorized by a prior order of the court. Title 20, Consolidated Pennsylvania Statutes, §5103, http://www.legis.state.pa.us/WU01/LI/LI/CTS/20/00.051.003.000..HTM


Note: I know of a few instances where funds have been transferred into a "Uniform Transfers to Minors Act" account. An UTMA account terminates at age 21. However, if the UTMA account is created under the terms of a will or a court order, the termination of the account can be deferred until age 25.

IMPORTANT. Laws differ from state to state. Contact an attorney licensed to practice in your jurisdiction for more specific information. Consult with the attorney handling the decedent's estate or the personal injury action. He will be the one preparing the Order of Court for the judge to sign awarding the funds to the guardian or directing the funds to a sequestered account.

TAXATION: yes, the child is being taxed on the income. Childrens' tax rates are typically lower than the tax on adults.

Answer 2

The age at which the child would get the money would generally depend on the "age of majority" in your state, which is often 18. The child is generally taxed, but only on the income of course (and not the principal) (this of course also depends on the source of the money, but e.g. a personal injury settlement is generally tax-free). It is somewhat risky for the parent to be the guardian over child's money. In my jurisdiction, there is some notion that you as the parent should pay for the child's needs, rather than using the child's money for that; and theoretically you could be sued by the child for mis-using the money.

Answer 3

The parents get to ultimately decide what to do with the money. If the parents want to set the money aside for the child they can put in an irrevocable trust, which the child can collect on at a certain age. Most of the time it might be 18 but sometimes they can put stipulations in there that the child must finish college first. Usually trusts are exempt from taxes until they can collect from it but there are tons of rules and regulations on them depending on how you set them up. You would need a skillful CPA or lawyer to set one up. If the parents don't put the money in a trust and spend it all, the child would have to sue them for it when they turn 18.

Answer 4

It would depend on what type of account the judge sets up for the child. My husband got money from a lawsuit when he was 4 or 5 and it was set up in a trust fund that he got full control over when he turned 25. Even though he had to wait until he was 25 to get all of his money, when he hit 18, he started getting a monthly allowance from his trust fund and he could not be denied anything that he needed like a place to live and medical expenses. That is how his was set up, but not all minor children's law suites are done this way.

Answer 5

You have to turn the money over to the child at 18....I think you can use the money as long as you can show it was for the child..depends on how the court has it set up for you.....

Answer 6

You need to contact your lawyer and tell them that and tell the judge that. If you have proof of the things you stated such as smoking marijuana. Tell the lawyer and show them the proof. (cause its illegal) But be careful of what you say cause if you have ever done something you regret and your ex knows he will fire it right back at you. And no they don't as long as you share the stuff you said.