DD got her first annuity check today!

[disneysteve]

A monumental day in our home today. My daughter was injured in a car accident when she was 6. She was awarded a settlement in the subsequent legal proceedings that established an annuity for her that would begin paying a monthly benefit when she turned 18. It seemed like an eternity away at that point but time flies and she will be 18 on Saturday. In today's mail, she got the first monthly check. She will continue to get a monthly check every month for the rest of her life with a 2% annual increase.

She has mixed feelings about getting the money. She certainly appreciates the money and understands how much it can benefit her. She just feels bad/guilty/whatever about how she came to have the money. She also feels kind of guilty because she knows a lot of her friends (probably most or all of her friends really) aren't in as good shape as she is. She wants to go tell people about the check coming but realizes it isn't really something she can brag about. We've been working with her for years to prepare her for this. It actually arrives at a very good time because we are in the thick of the college search process so it was natural to fold in a discussion of how this money will help with college costs and greatly reduce the need for student loans. Once out of school, it will be there to help pay any loans she does accumulate.

Honestly, I'm not sure how I feel about all of this but I know that she's got a good head on her shoulders when it comes to money and I trust that she isn't going to go blow this on crap.

[creditcardfree]

I agree. Focus on using it for college and getting her life established. At some point, she might consider giving some of it away in a way she can feel good about. Start a non profit, set up a scholarship fund. Of course, I don't know the amount so maybe that doesn't make sense, but it is okay to give it away if it is just too much.

[disneysteve]

I agree. Focus on using it for college and getting her life established. At some point, she might consider giving some of it away in a way she can feel good about. Start a non profit, set up a scholarship fund. Of course, I don't know the amount so maybe that doesn't make sense, but it is okay to give it away if it is just too much.

Good point about charitable giving. The amount isn't crazy (several hundred dollars). Right now, as a senior in high school, it is far more money than she needs. But she understands the need to sock it all away (or most of it at least) right now in preparation for college next year when it suddenly won't seem like all that much money. Once she's out of college especially, charity should be on her list for some of that money but when we talk about it, I'm going to bring that up even now. Even if she only gives a small amount like $25/month to something, I think it's a good habit to get her into.

[LivingAlmostLarge]

Roth IRA? Then set it aside for college unless you are paying for it 100%? In which case perhaps a house down payment?

[bjl584]

That will give her a nice head start. And, it will be a nice bit of extra cash flow each month since it is a lifetime annuity.

Without asking you to get too personal, can you elaborate on some of the details of the car accident? Were you and your wife also in the car? I'm assuming that neither of you two suffered injury?

[disneysteve]

Roth IRA? Then set it aside for college unless you are paying for it 100%? In which case perhaps a house down payment?

She already has a Roth. She started last year with money from babysitting and her summer job. She can't use the annuity money since it isn't earned income (though she can use those dollars since money is fungible).

College for sure, as I said. My expectation is that she'll keep maybe $100/month for spending money and fun and apply the rest toward college costs.

Down the line, who knows. It'll certainly depend on life after college. She may go to grad school so it will help with that. It will help with her first apartment, car, and all of life's expenses.

[disneysteve]

Without asking you to get too personal, can you elaborate on some of the details of the car accident? Were you and your wife also in the car? I'm assuming that neither of you two suffered injury?

My wife was driving her to summer camp and got hit on the driver's side in an intersection by a speeding car. DD was also seated on that side behind my wife. The impact pushed the side door into DD's head. She was knocked unconscious and had significant cuts to her face, eyebrow, eyelid, and nose. She was taken to the regional trauma center where the workup revealed that in addition to the visible stuff, she had also aspirated a tooth into her left lung. They did not have a pediatric bronchoscope there so they had to transfer her to Children's Hospital in Philly. CHOP took care of the lung and did all of the reconstructive surgery on her face. They weren't sure if her eyelid would be fixable but thankfully it was and works fine now. There are definite scars (both physical and emotional) but she's alive and well.

DW wasn't physically injured. Just the expected aches and pains for a few days. More emotional trauma from turning around to check on DD and seeing her unconscious and covered in blood and thinking she was dead. She still has flashbacks about that.

I wasn't in the car. I was at work when DW called me from the ambulance on the way to the trauma center and I met them there. Not a phone call you ever want to receive.

[bjl584]

My wife was driving her to summer camp and got hit on the driver's side in an intersection by a speeding car. DD was also seated on that side behind my wife. The impact pushed the side door into DD's head. She was knocked unconscious and had significant cuts to her face, eyebrow, eyelid, and nose. She was taken to the regional trauma center where the workup revealed that in addition to the visible stuff, she had also aspirated a tooth into her left lung. They did not have a pediatric bronchoscope there so they had to transfer her to Children's Hospital in Philly. CHOP took care of the lung and did all of the reconstructive surgery on her face. They weren't sure if her eyelid would be fixable but thankfully it was and works fine now. There are definite scars (both physical and emotional) but she's alive and well.

DW wasn't physically injured. Just the expected aches and pains for a few days. More emotional trauma from turning around to check on DD and seeing her unconscious and covered in blood and thinking she was dead. She still has flashbacks about that.

I wasn't in the car. I was at work when DW called me from the ambulance on the way to the trauma center and I met them there. Not a phone call you ever want to receive.

Wow. Thank God she is alive and well today. Definitely an experience that I would never want to go through.

[bigdaddybus]

This is a good reminder for my family. My son has a 5 yr annuity that pays out on each birthday 18-22, due to an accident when he was 5 weeks old.


Glad to hear your daughter is doing alright now

[rennigade]

Ive never been in this position or know of anyone that receives payouts each month or year due to an accident...but how does that work?

Im assuming the person that hit your wife...their insurance company is paying that out? Is the total sum so large that they just cant pay a lump sum up front? Why is it stretched out month to month for life?

[disneysteve]

Im assuming the person that hit your wife...their insurance company is paying that out? Is the total sum so large that they just cant pay a lump sum up front? Why is it stretched out month to month for life?

Yes, the annuity payments come from the insurance company.

Why an annuity and not a lump sum? We discussed and debated that at the time as it was our choice which way to go. Our lawyer, who I have a great deal of trust and respect for, advised the annuity. Otherwise, an 18-year-old suddenly gets access to a 6 or 7 figure account with no restrictions. It isn't hard to think of ways that can cause problems. If I was in that situation personally today, I would take the lump sum because I know I can responsibly handle a large sum, invest it accordingly, and make it last a lifetime. I wouldn't want to hand that responsibility to a teenager, even my daughter.

[kork13]

DisneySteve, thanks for sharing the details... I remember you mentioning your DD's childhood accident/injury on multiple occasions, and I've always wondered exactly what happened. I'm glad to know that there isn't much permanent injury, at least physically. I can't imagine the terror of getting that kind of phone call...

On the up-side, having the monthly annuity check will definitely be a significant boon for her throughout her life. As already stated, it can help her through college, into young adulthood, and even as an eventual wife/parent help provide for a small part of her needs.

(side note, and I don't mean to joke at your family's expense, but "CHOP" is an awful acronym/name for a children's hospital -- a 7 y/o me would be terrified of such a place. )

[Blessed]

I'm glad you DD has had a good example with her folks and has a good head on her shoulder. I'm sure she will handle it well. I know a young man who got a lump sum at 18 of 60k and gone in months. I also have a very good friends whos' DD is now 20 and gets 2700 a month from a major accident that left her in the hospital a year at age 11. The young lady is always broke in 2 weeks. It is unfortunate the young people we know in a similar situation did not have guidance.

[disneysteve]

I also have a very good friends whos' DD is now 20 and gets 2700 a month from a major accident that left her in the hospital a year at age 11. The young lady is always broke in 2 weeks.

Better for her to burn through $2,700 in 2 weeks than to have a couple million that she could burn through all at once. That's exactly why we went with the annuity and not the lump sum. Even if the person is irresponsible at a young age, there is still the opportunity for them to see the light and handle the monthly payments better in the future.

[disneysteve]

(side note, and I don't mean to joke at your family's expense, but "CHOP" is an awful acronym/name for a children's hospital -- a 7 y/o me would be terrified of such a place. )

Funny but living here, we're just used to calling it that. CHOP is one of the premier children's hospitals in the world. People come from all over to be treated there.