Minor’s Claims/Funds – Funds Other Than Claim Proceeds That Might Pass to a Minor

An individual under 18 years of age is a minor.  It is not uncommon for a minor to be entitled to receive funds by inheritance through an estate, as a result of the minor being a beneficiary on a life insurance policy, annuity or financial account after the owner has died.

If the funds are $25,000 or less then the Court may order them to be paid (1) to a guardian of the estate of the minor, (2) into a custodial account with a financial institution authorized to receive trust funds for deposit into the name of the minor to be paid to the minor upon attaining age 18, (3) to a parent having custody of the minor, or (4) in a rare instance, to the minor.
If the total sum exceeds $25,000, it must be managed by a guardian either (1) with an adequate surety bond, or (2) within a restricted access custodial account (in lieu of bond, but accessible to the guardian ONLY with a specific approval of the Court).

If the funds result from the settlement verdict on the wrongful death claim of another person, and the beneficiary is under age 25, the proceeds will either (1) be used to purchase a structured annuity providing for periodic payments to, or for the benefit of the beneficiary for life or a defined period of time, or (2) paid into a wrongful death trust established by the Court for the benefit of the beneficiary.  The trustee selected by the Court must be approved by a guardian of the minor beneficiary or by beneficiary if at least 18 years of age.  The wrongful death trust will remain in existence until the beneficiary attains age 25 years.  The trustee’s authority and limitations for expenditure of trust assets during the trust’s existence will be established in the trust document and the trustee will account to the Court.  See the website Tabs “Estates, Wrongful Death Cases” and “Trusts, Wrongful Death Trust” for more detailed discussions.

Parents and guardians of minors do not have the inherent authority to settle claims of minors.  Approval must be obtained from the probate court for the authority to settle a minor’s claim, execute releases that bind the minor and receipt for the settlement proceeds.  The Court’s involvement is to assure that the best interests of the minor are protected, the settlement is preserved for the intended beneficiary, and is not compromised by the personal interests of the parent or guardian.

With prior Court approval, the custodial funds may be accessed for the benefit of the minor before attaining age 18, but only under limited circumstances.