Detailed Answer
Short answer: In Maine, you generally cannot simply take a child’s settlement money and spend it without court involvement. If you want funds used before the child turns 18 for college, medical bills, or other needs, you normally must get the court’s permission or put the money in a court‑approved arrangement that allows limited disbursements for the child’s benefit.
This is not legal advice. This article explains common Maine procedures and options so you can talk with a local attorney or the probate court about your situation.
Why the court is usually involved
Settlements that compensate a minor (for personal injury, wrongful death, or other claims) usually require judicial approval to protect the minor’s interests. A court’s review helps ensure the settlement is fair and that the money will be used for the child’s benefit. In practice, courts often:
- approve a lump‑sum settlement;
- require the money be held in a blocked or restricted account, or under a guardianship of the estate;
- appoint a guardian ad litem or an attorney to represent the child’s interests in court;
- enter orders permitting specific early disbursements for things such as medical care or education.
Common ways parents or guardians obtain funds for college or medical needs
Depending on the facts and the judge’s order, options may include:
- Court‑approved withdrawals from a blocked account or guardian of estate: The court that approved the settlement can allow specific withdrawals for tuition, fees, or medical care if a parent or guardian petitions the court and shows the withdrawal is in the child’s best interest.
- Guardianship of the estate: A guardian of the minor’s estate (appointed by probate court) manages the funds and can ask the court for permission to pay for education or medical needs.
- Custodial account or UTMA/UGMA style arrangements: If settlement funds are placed under a custodial transfer law, the custodian may be allowed to spend money for the child’s benefit while following statutory limits (the exact treatment depends on how the settlement is structured).
- Special needs trust: If the child has a disability, placing funds into a properly drafted special needs trust can protect benefits (Maine’s programs and federal benefits rules matter here).
- 529 plan or other education savings: The money can be used for qualified higher‑education expenses if transferred into a 529 or similar plan; tax and means‑tested benefit effects should be checked first.
- Structured settlement payments: If part of the settlement is periodic payments (an annuity), the schedule can sometimes be arranged so payments begin before age 18, but that must be approved by the court and the annuity issuer.
How a parent or guardian gets permission to use funds early
Typical steps you will see in Maine cases:
- Keep the settlement documentation and the court’s original approval order. Those orders often control how funds can be handled.
- Talk with a Maine attorney experienced in minor settlements or probate. An attorney can prepare the petition or motion the court needs.
- File a petition in the court that approved the settlement or in the probate court asking for a distribution or for appointment of a guardian of the estate with authority to pay education or medical expenses.
- Provide supporting evidence: invoices, tuition bills, financial statements, and an explanation why use of funds now is in the minor’s best interest.
- The court may appoint a guardian ad litem or require a hearing. The judge will decide whether to allow the withdrawal or other relief based on the child’s best interest and the terms of the settlement.
What courts consider
When deciding whether to allow early access to settlement funds, courts typically consider:
- The terms of the settlement and any prior court order;
- Whether the requested withdrawal is for the child’s direct benefit (education, medical care, housing, therapeutic needs);
- Whether alternative funding exists (insurance, financial aid, parent resources);
- The amount remaining for the child’s long‑term needs;
- Potential impact on public benefits like MaineCare (Medicaid); some disbursements can affect eligibility unless funds are held in qualifying trusts or accounts.
Special notes about public benefits and disability
If the child receives or may be eligible for means‑tested benefits (MaineCare, SSI, etc.), spending settlement money improperly can cause loss of benefits. Parents should consult both a Maine attorney and a benefits counselor. For minor beneficiaries with disabilities, an ABLE account or a properly drafted supplemental needs trust may preserve eligibility for public benefits while allowing use of funds for quality‑of‑life or education expenses.
Where to find official Maine resources
For general information about Maine courts and probate contacts, see the Maine Judicial Branch: https://www.courts.maine.gov/. For Maine state government and statute resources, see the Maine Legislature site: https://legislature.maine.gov/. Your local probate court or an attorney can point to the specific statute or rule that applies to your case.
Helpful Hints
- Do not spend settlement money without court approval. Unapproved spending can lead to repayment orders or other legal problems.
- Gather documentation: settlement papers, court orders, bills (tuition, medical), and proof of the child’s needs before petitioning the court.
- Talk to a Maine attorney who handles minor settlements or probate. Many attorneys offer a short consult to explain likely outcomes and court procedures.
- Ask about guardian ad litem involvement—courts often require one to represent the child’s interests at hearings.
- If public benefits are involved, get benefit‑specific legal advice (Medicaid/SSI) before moving or spending funds.
- Consider education‑specific options, such as 529 plans, which can be funded from settlement proceeds if properly authorized by the court.
- If the child has a disability, investigate special needs trusts or ABLE accounts to preserve benefits while using funds for the child’s needs.
- Timelines matter: start the court petition early so funds are available when bills are due (tuition deadlines, medical procedures, etc.).
Reminder: This article explains common Maine procedures and choices but is not a substitute for personalized legal advice. Contact a Maine attorney or the probate court for guidance tailored to your facts.