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Disclaimer: This is general information and not legal advice. Laws change and every case is different. Consult a North Dakota attorney before making decisions about court petitions, trusts, conservatorships, or annuities for a minor.

Detailed Answer

When you have settlement funds that will benefit a child in North Dakota, you cannot simply hand a large lump sum to the minor. North Dakota law and common court practice protect minors by requiring court supervision or a fiduciary arrangement before final distribution. A common and practical solution is to convert the settlement into an annuity or otherwise structure the payments so the child receives periodic payments under court-approved terms.

Below are clear, practical steps you (or your attorney) typically follow in North Dakota to set up an annuity or other structured arrangement for settlement funds held for a child:

1. Get court approval for the settlement on behalf of the minor. North Dakota courts generally require that settlements on behalf of minors be approved by the court to show the settlement is fair and in the child’s best interest. That approval may be handled in the county where the claim was filed or through the probate/juvenile docket. Your attorney will file a petition asking the court to approve the compromise and to enter orders directing how the money will be handled.
2. Decide whether to buy an annuity or use a court-supervised account. The court will consider options such as:
   • A structured settlement (an insurance annuity that pays the child periodically).
   • A restricted or “blocked” bank account under court control.
   • A conservatorship/guardianship account where a court-appointed fiduciary manages funds for the child.
   • A trust (including a spendthrift trust) or a special needs trust if the child has disabilities.

   Courts favor arrangements that protect the child’s funds and meet their future needs. An annuity can be attractive because it shifts investment and longevity risk to an insurance company and creates predictable payments.

3. Work with the insurer or defendant to purchase the annuity. If the settlement payer agrees, they can fund an annuity contract directly with an insurance company. That contract can be designed to pay the child according to the schedule approved by the court (for example, monthly payments until age 18, then a lump sum at age 21, or lifetime payments). The insurer or defendant may purchase the annuity in the name of the child’s guardian or conservator, or they may assign periodic payment obligations to a qualified assignment company that purchases the annuity from an insurance carrier.
4. Obtain a court order approving the annuity or trust and directing the disposition of settlement funds. The court order should specify:
   • Who will receive and manage payments (guardian, conservator, or trust trustee).
   • Exact payment schedule and conditions (age milestones, lump-sum distributions, or continuing periodic payments).
   • Reporting requirements for the fiduciary (accounting and notice to the court).

   Courts issue the order after confirming the arrangement protects the child’s interests.

5. If a guardian or conservator is needed, have one appointed under North Dakota procedures. When funds will be managed on behalf of a minor, the court may appoint a guardian or conservator (sometimes called a conservator of estate). The appointed fiduciary has legal duties to manage the assets prudently and to report to the court as required.
6. Consider tax, benefits, and eligibility consequences. Structured settlements used to replace future lost earnings or for physical injury often have favorable tax treatment under federal law. But settlement allocations can affect the child’s eligibility for public benefits (Medicaid, SSI), so if the child receives public benefits, consider a special needs trust or consult a benefits advisor and an attorney familiar with North Dakota rules.
7. Keep documentation and comply with ongoing court reporting. The guardian/conservator or trustee should keep receipts, file required accountings, and seek court permission before making unusually large expenditures or changing the structure of payments.

Where to look for North Dakota rules and resources: start with the North Dakota Century Code and the North Dakota courts’ practice materials. The North Dakota Century Code and local court rules govern guardianship, conservatorship, and probate procedures; those provisions explain filing requirements, notice, and court oversight. For general code resources, see the North Dakota Century Code at https://www.legis.nd.gov/cencode and review the court’s guidance on guardianship and conservatorship at the North Dakota Courts site.

Common types of annuity and distribution designs used for minors

• Periodic payments (monthly or yearly) until a specified age.
• Deferred payments that begin at a future milestone (for example, age 18 or 21).
• Combination of periodic payments and a larger lump sum at older age.
• Lifetime annuity to provide ongoing support past majority (less common unless the child has a permanent disability).

Choosing the right design depends on the child’s needs, family goals, public benefits, and tax considerations. If you want to preserve control beyond majority, discuss trust options with your attorney.

Helpful Hints

• Start with a court-approved plan. Do not attempt to place large settlement funds directly under the child’s name without court orders in North Dakota.
• Work with an attorney who handles minor settlements and structured settlements; they will prepare the petition the court needs and negotiate with the insurer or defendant’s counsel.
• Ask the insurer for annuity quotes from A-rated or better carriers and get written proposals showing payment schedules, guarantees, and fees.
• Consider a trust if you want customized control (e.g., protection from creditors, staged distributions, or saving public benefit eligibility).
• If the child receives Medicaid or SSI, consult both an attorney and a benefits specialist to avoid unintentionally terminating benefits; a properly drafted special needs trust may be required.
• Document everything and retain copies of court orders, annuity contracts, and all correspondence with insurers and trustees.
• Ask the court about required accountings and notice periods so you remain in compliance with North Dakota reporting rules.
• Before finalizing, evaluate tax consequences with a tax advisor—especially where portion of settlement may be taxable or tax-free.
• If the child has a disability, consider a special needs trust or other protective device tailored to both immediate and long-term needs.

Getting the right structure in place protects the child and reduces the likelihood that funds will be misused or jeopardize public benefits. Because the procedures and forms vary by county and by the specifics of the claim, consult a North Dakota attorney experienced with minor settlements and annuities to prepare the petition, negotiate the annuity terms, and obtain the required court orders.

Useful starting points:

• North Dakota Century Code: https://www.legis.nd.gov/cencode
• North Dakota Courts — resources about guardianship and conservatorship (search for the court’s guardianship/conservatorship pages and local forms).

Again, this is not legal advice. Use this information to prepare questions for a North Dakota attorney who can apply the statutes and local court practice to your specific situation.