Short answer: Yes—sometimes. Under Ohio law, a parent or custodian cannot freely spend a minor’s settlement funds. To use those funds for things like college tuition or medical bills before the child reaches majority, you usually need a court-approved process or a custodial arrangement that authorizes such spending. Courts favor uses that directly benefit the child, but they also protect the child’s long-term interests.
Detailed Answer — How Ohio law treats a minor’s settlement money
1. Why courts get involved
When a minor receives money from a lawsuit, settlement, or insurance payment, the money is considered the child’s property. Probate courts supervise the handling of a minor’s property to protect the child’s financial interests. That means a parent or guardian usually can’t simply deposit the money into a personal account or spend it without some formal step approved by the court.
2. Typical legal routes to access funds before majority
- Guardian (or guardian of the estate): The probate court can appoint a guardian of the minor’s estate to manage settlement funds. The guardian must act in the child’s best interest and typically must get court permission to use large amounts. See Ohio probate/guardianship rules and statutes for procedures and duties (Ohio Revised Code — guardianship chapters). For an overview of the Ohio Revised Code, see: https://codes.ohio.gov/ and for guardianship statutes, see the guardianship chapter: https://codes.ohio.gov/ohio-revised-code/chapter-2111.
- Court-approved settlement or minor’s compromise: Many settlements involving minors are entered with a court order that approves the settlement and directs how to hold or distribute the proceeds. The court may order funds to be placed into a blocked account, a trust, an annuity, or under the control of a guardian. Any early distributions usually require a court motion showing the expenditure benefits the child (e.g., tuition, medical care).
- Custodial (UTMA/UGMA) accounts: If the settlement is placed into a custodial account allowed under Ohio law (often called the Uniform Transfers to Minors Act or a similar custodial statute in many states), the custodian can spend money only for the minor’s benefit. Some custodial accounts permit payment for education or medical needs before the beneficiary reaches the age of termination under the statute. If the settlement document or court order designates a custodial account, check the account rules and any court orders for permitted uses.
- Structured settlements / annuities: If funds are paid as scheduled annuity payments, a parent or guardian may not be able to divert future payments without court approval. Some structured settlements allow lump-sum advances or periodic payments for specific needs, but modifications usually require court action.
3. Common situations where courts approve early use
Courts in Ohio commonly approve early use of a minor’s settlement funds for:
- Reasonable and documented medical expenses not covered by insurance or Medicaid.
- College tuition, fees, and related educational expenses when the request shows the expense benefits the child and the expenditure is reasonable relative to the total funds held for the child.
- Purchases or services that clearly promote the child’s health, education, or welfare.
4. Steps to request court permission to use funds
- Do not cash or move the settlement checks into a parent’s personal account. That risks a court order against you and possible sanctions.
- Determine how the settlement was structured (court-approved minor’s compromise, guardian-held funds, custodial account, structured settlement annuity). The settlement agreement or court order usually says.
- If no guardian of the estate exists, petition the probate court to appoint one.
- File a motion or application in the probate court asking for a release of funds for specific expenses. Attach documentation (bill for tuition, school enrollment, medical bills, itemized cost estimates).
- The court will review the request and may hold a hearing. If the judge finds the expense benefits the minor and the requested distribution is reasonable, the court can authorize the payment from the minor’s funds and order how the money is to be paid.
5. Special issues to watch for
- Third-party liens: Medicaid, ERISA plans, or other third parties may have liens or subrogation claims on a settlement for medical care. You must address these before or as part of the court application.
- Attorney fees and costs: If the settlement included attorney fees, ensure those fees were properly approved by the court.
- Accountings: Guardians often must file periodic accountings with the probate court showing all income and expenses related to the minor’s property.
6. Example (hypothetical)
Suppose a minor receives a $120,000 settlement after an accident. The settlement was approved by the probate court and the money sits in an account under the court’s oversight. The parent wants $20,000 to pay for the child’s upcoming college tuition. The parent would ask the probate court (through a guardian or by motion) to authorize a $20,000 distribution for tuition, provide the school bill and enrollment paperwork, explain how the payment benefits the child, and show that sufficient funds will remain to protect the child’s future needs. If the court is satisfied, it can approve the payment directly to the school.
7. How long will the process take and what are the likely costs?
Timing depends on the probate court’s schedule and whether anyone objects. Minor distributions for documented urgent medical bills can move faster. Expect several weeks to a few months in many cases. Costs can include court filing fees, guardian bond premiums (if required), and attorney fees if you hire counsel. Courts sometimes authorize attorney fees to come from the settlement funds, but that usually requires court approval.
8. Where to look in Ohio law and courts
Ohio’s probate and guardianship rules govern these procedures. For statutory text and chapter listings, start at the Ohio Revised Code website: https://codes.ohio.gov/. For guardianship and probate forms and local procedures, visit your county probate court’s website or the Ohio judicial branch resources. Many probate courts publish local forms and instructions for appointing a guardian of the estate and for filing motions to release funds.
Helpful Hints
- Don’t move or spend settlement funds without a court order — doing so can lead to liability and repayment obligations.
- Keep clear records: bills, invoices, school enrollment, and correspondence. Courts want documentation showing the expense benefits the child.
- Ask the probate court whether the settlement created a specific account type (blocked account, custodial account, trust, annuity) and what rules apply to that account.
- If Medicaid or other liens exist, identify them early. Addressing liens can change how much is available for educational or medical uses.
- Consider hiring or consulting a probate attorney experienced with minor settlements in Ohio. An attorney can prepare the court petition, propose precise orders, and handle lien negotiations if needed.
- If the child is close to majority and funds are intended for college, ask the court about staggered releases or trust provisions to protect funds while allowing payments for tuition when due.