SavingsTalk.com

deli08 · 10-31-2007, 01:35 PM

My daughter will be turning 13 in December. She will soon be receiving an injury settlement of approximately $43,000. She is not good with money. The attorney said it can be structured through an annuity so she doesn't get just a fat wardrobe check when she turns 21, but I don't believe insurance companies provide annuities just so they can get into corporate heaven when they die. Do they operate like banks, using your money to earn good returns while they make you dance for pennies?<br />It's not that I don't care for banks. Or insurance companies. They both provide a service, but do not exist for my benefit, and since I have no experience in this area, I seek counsel of those that do.<br />

goodMOnk · 10-31-2007, 01:35 PM

you're her parent - you can keep her from spending the money foolishly until she's at least 18 just by being her parent - don't give her access to it - invest it in mutual funds for future growth - put a big chunk in a 529 college plan - then it can only be used for that. I don't know how much the admin costs would be, but you could set up a trust, so it only pays out a portion at certain ages, like 10% at each year for college, 10% for college grad, half the balance at 25% and the rest at age 30 or for buying a house

realtime · 10-31-2007, 01:35 PM

Yes, you should have it done as an annuity or an IRA or some sort of investment so that she gets the interest only. The insurance company will provide the attorney for a check for ALL the money - they don't pay it out as an annuity. You have to set that up.

No 13 year old is good with money - it's your job to teach her how to be good with it. Although, I would be careful about what you teach her, since you don't appear to care for banks much.

Talk to your the lawyer (that's why he is being paid). You can set it up sop all she receives is the interest until X age after which time she can receive X amount (a portion) as a lump sum (for college or whatever) and keep the rest in the annuity. Or you can just make it so she only gets the interest. That way she always has the primary for an emergency or a house if she wants.

You, your daughter, and your spouse should all take a few financial planning classes together so that she learns how to be responsible with the money. $43,000 really isn't all that much any more, but with proper planning, it can turn into a nice sum later.

hansen · 10-31-2007, 01:35 PM

An annuity might be a good thing for her.It could be set up so that based on her life expectancy, she would receive a fixed amount for the principal and interest for the rest of her life. Of course with inflation it would have less and less buying power as time goes on.
You might check into an endowment policy where you make a single payment in at $43,000 and she receives a lump sum payment of principal and interest after 20 or 30 years when she is mature enough to manage the money. Again there is the inflation problem.
Since it is her money you probably do not have any other options to protect her from her own foolish behavior when she reaches 21.
Picking a financially strong insurance company is another problem. In my home town (Milwaukee), there is Northwestern Mutual Life Insurance Company.who is over 100 years old and has agents all over the US. This mutual company has no stockholders. It is owned by the policy holders.

goodMOnk · 10-31-2007, 01:35 PM

you don't buy annuities in a low interst environment
and that is what we have right now
get a second opinion.

10-31-2007, 01:35 PM	#1
deli08 Piggy Bank Join Date: Jul 2006 Posts: 51 Rep Power: 6	Should my 12 year old take an annuity? My daughter will be turning 13 in December. She will soon be receiving an injury settlement of approximately $43,000. She is not good with money. The attorney said it can be structured through an annuity so she doesn't get just a fat wardrobe check when she turns 21, but I don't believe insurance companies provide annuities just so they can get into corporate heaven when they die. Do they operate like banks, using your money to earn good returns while they make you dance for pennies?<br />It's not that I don't care for banks. Or insurance companies. They both provide a service, but do not exist for my benefit, and since I have no experience in this area, I seek counsel of those that do.<br />

10-31-2007, 01:35 PM	#2
goodMOnk Greenhorn Join Date: Jul 2006 Posts: 18 Rep Power: 0	Should my 12 year old take an annuity? you're her parent - you can keep her from spending the money foolishly until she's at least 18 just by being her parent - don't give her access to it - invest it in mutual funds for future growth - put a big chunk in a 529 college plan - then it can only be used for that. I don't know how much the admin costs would be, but you could set up a trust, so it only pays out a portion at certain ages, like 10% at each year for college, 10% for college grad, half the balance at 25% and the rest at age 30 or for buying a house

10-31-2007, 01:35 PM	#3
realtime Greenhorn Join Date: Jul 2006 Posts: 27 Rep Power: 6	Should my 12 year old take an annuity? Yes, you should have it done as an annuity or an IRA or some sort of investment so that she gets the interest only. The insurance company will provide the attorney for a check for ALL the money - they don't pay it out as an annuity. You have to set that up. No 13 year old is good with money - it's your job to teach her how to be good with it. Although, I would be careful about what you teach her, since you don't appear to care for banks much. Talk to your the lawyer (that's why he is being paid). You can set it up sop all she receives is the interest until X age after which time she can receive X amount (a portion) as a lump sum (for college or whatever) and keep the rest in the annuity. Or you can just make it so she only gets the interest. That way she always has the primary for an emergency or a house if she wants. You, your daughter, and your spouse should all take a few financial planning classes together so that she learns how to be responsible with the money. $43,000 really isn't all that much any more, but with proper planning, it can turn into a nice sum later.

10-31-2007, 01:35 PM	#4
hansen Greenhorn Join Date: Jul 2006 Posts: 17 Rep Power: 0	Should my 12 year old take an annuity? An annuity might be a good thing for her.It could be set up so that based on her life expectancy, she would receive a fixed amount for the principal and interest for the rest of her life. Of course with inflation it would have less and less buying power as time goes on. You might check into an endowment policy where you make a single payment in at $43,000 and she receives a lump sum payment of principal and interest after 20 or 30 years when she is mature enough to manage the money. Again there is the inflation problem. Since it is her money you probably do not have any other options to protect her from her own foolish behavior when she reaches 21. Picking a financially strong insurance company is another problem. In my home town (Milwaukee), there is Northwestern Mutual Life Insurance Company.who is over 100 years old and has agents all over the US. This mutual company has no stockholders. It is owned by the policy holders.

10-31-2007, 01:35 PM	#5
goodMOnk Greenhorn Join Date: Jul 2006 Posts: 18 Rep Power: 0	Should my 12 year old take an annuity? you don't buy annuities in a low interst environment and that is what we have right now get a second opinion.

SavingsTalk.com

Your guide to saving money and making smart investments!