Settlement for 5yo. What would you do?

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Open an investment fund with Ave Maria mutual funds. Over the course of 13 years it will mature quite a bit. If you prepare your kid for the windfall, and help them see that they should leave it alone, this could set them up with a nice starting point for their retirement, or go a long way to helping them tackle any remaining student loan debt.

Do NOT give it to them. Even the most mature 18yo I know would make stupid decisions with that sudden of a windfall.
 
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Allegra said:
I can’t invest the money or do anything with it at all. The only thing I decide is whether she gets it all at 18 or over time, starting at 18. I would hope that she would use it for her education or as others suggested, save it for a down payment on a home.
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Based on upon that information I would go with the payout over time starting at 18. As she grows toward 18 and you start having discussions about college or life after HS graduation, at some point you could tell her that this money will be available to her to use as she wishes, but that you strongly urge she use it to either further her education, or as others have suggested it would make a good down payment on a house.

Trust that the values that you will be instilling in her between now and her 18th or 19th birthday will carry her through. You might even talk to her about taking a portion of it to “play” with…maybe do some traveling after she graduates. In the long run you’ll have no control over how she spends the money, you just have to do your best to instill your values and let God take it from there.
 
I wish $33k could be a down payment for a home… haha… guess it depends where you live. Here, that literally wouldn’t even be close to a down payment for a tiny studio condo.
 
twf said:
I wish $33k could be a down payment for a home… haha… guess it depends where you live. Here, that literally wouldn’t even be close to a down payment for a tiny studio condo.
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It would be a 20% down payment on a $165,000 home. It is true that real estate prices in any part of the country that is halfway desirable have gone through the roof. Still, there are areas where this is possible. Depends on where you’re willing to live and what kind of jobs and social infrastructure are nearby. There is no easy answer.
 
If she has smaller amounts regularly she may come to rely on it and then when it runs out bam, down to earth. I would tend towards giving her it as reward for graduating college and then she could pay off her loans and get a down payment on a home, and so starting her working life debt free. Ultimately though, it’s up to her. I once worked with a guy who got given 18k when he turned 18 and spent it all on cocaine over the next couple of years. All you can do is advise her and set a good example. To flip it on its head after a childhood spent in a good Catholic home she might even want to give it all to charity or to support her doing mission work or to a holy order - be prepared for that too. What I am saying is, she may not spend it how you think she should but don’t let it divide you guys when the time comes.
 
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Put it in a stock mutual fund.

My younger brother got an inheritance at that age and he was very careful with it. Worked his way through college and had some leftover when he graduated.
If you raise her to save and to understand stewardship over money, she’ll be fine.
You’d be surprised how money can grow over 15 or 20 years.
 
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While it may not fund an entire down payment, it would certainly provide a nice start to a down payment.
 
I think that the payouts between 18 and 23 followed by a lump sum make sense.

You can set up a bank account while she is still a minor that will receive the monthly payments when she turns 18, and establish that you are a co-signer on the account so you can monitor it.

I think as far as her attitude towards money, it will be based on how you frame it as you teach her about money in general and this settlement in particular. If you call it “your money” versus “your college fund” or ‘your nest egg’ that makes a big difference psychologically. By the time she’s a teen, you will have a better handle on what sorts of school trips and school activities she is involved in, what her college ambitions are, etc.

I think you are way overthinking it. The annuity payments followed by the lump sum seem to make sense. Go with your instinct here.
 
I am legally unable to take any of this advice. Although investing is something I would encourage her to do with it.
 
Yes. State law requires that the money be put in an account until they are an adult. We have some choice as to whether its an account that pays out when she’s 18, or one that pays it out gradually with interest. At least, those are the choice a judge is likely to agree to. The judge gets the final word.
 
Assuming she would want to live in St. Louis, where we live currently, that would get her into a decent home in a nice school district.
 
That stinks. So you literally just have to sit on it and not do anything with it, even if it is being done for her
 
It’s not our money. It’s hers. So yeah. I think it’s a good law. How many people would take their kids’ money and use it to redo their bathroom under the justification that the kid will use it too? The only problem is, the age of majority is a symbolic number. Realistically, children reach adulthood at their own pace.
 
I agree that it’s her money, but you’re not making a plan so you can benefit from it, you’re making a plan so that it can do something more than just sit there collecting dust.

I understand it in most cases, a lot of parents would take advantage, but you’re not looking to… Could an exception be made for this very specific use?
 
I’m not sure. I think the judge gets final say. I can ask the attorney if he can request a mutual fund, but it would have to be overseen by someone.
 
I think you should, otherwise the money is just… sitting there… if the intent is for it to do good for your daughter, then that would be the best option. It’s not without risks, but Ave Maria has a good track record.
 
The money is hers. And when she’s 18 how she’ll spend it really isn’t anyone’s business besides hers, and her creditors.

I think the best way to deal with this is raise her to understand the value of money, what it takes to actually make money, how so many people live without money, and that this is a responsibility. I came into a bit of money when I as a late teenager. I used it to buy and insure a car so I could get a job. I don’t think there’s any reason to think your daughter would do any different. Or use it for college.

And if she decides to bum it across Europe for eight months on it instead, well… That’s her choice. But you have 15 years to teach her about what a leg-up this money is and that she can set herself up for success with it, or, not.
 
Yes, ask your attorney. It is unlikely that you will be forbidden from putting it in a vanilla investment vehicle for her: that is, day-trading would not be OK but parking it ina S&P 500 mutual fund or something similar to what college savings funds use for someone in her age group/investment horizon would be allowed. You’re smart to learn what the court requires, find common-sense route to investment that fits and then just do that.

Back to your original question…if you teach her how to use money, she’ll probably be fine. If you don’t, then what she does with this money is what she probably would have done with student loans and credit cards. There is no substitute for a reasonable education about money.
 
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