Detailed Answer

This answer explains how, under South Dakota law, a parent or guardian may be able to access some of a minor’s settlement proceeds before the child turns 18 to pay for college or medical costs. It describes common legal paths, practical steps, and important risks to watch for. This is general information only and not legal advice.

How the law treats money awarded to a minor

When a minor (someone under 18) receives a settlement or judgment—especially from a personal-injury claim—the funds are treated differently than money paid directly to an adult. Courts generally take steps to protect a minor’s property and may require formal approval of the settlement. In many cases the court will:

• require a petition and hearing to approve the settlement;
• appoint a guardian ad litem or attorney to represent the minor’s interests;
• place the money into a court-ordered account, structured settlement, custodial account, or conservatorship/guardianship account until the minor reaches majority.

For the applicable South Dakota statutes on probate, guardianship, and related procedures, see the South Dakota Codified Laws: https://sdlegislature.gov/Statutes/Codified_Laws

Common legal options to access funds early for education or medical care

Which option is appropriate depends on the case facts (amount, type of claim, the child’s needs, existing public benefits). Common pathways include:

• Court-approved partial use from a blocked account: A court that approves the settlement can direct that part of the money be released to pay documented college tuition or necessary medical treatment. You or your attorney would petition the court and show why the withdrawal serves the child’s best interest.
• Conservatorship or guardianship with court authorization: If a conservator (also called a guardian of the estate) is appointed, that person can manage the funds under court supervision. The conservator must follow court orders and accounting rules and can ask the court for permission to pay for education or medical care from the minor’s assets.
• Structured settlement annuity: For large settlements, the parties sometimes arrange periodic payments (an annuity) that can be tailored so payments come when tuition is due or medical needs arise. A court typically must approve such arrangements for a minor.
• Custodial account or UTMA/UGMA-style arrangement: Some states allow custodial transfer statutes (UGMA/UTMA) that let a custodian hold property for a minor. If that applies in South Dakota, a custodian can use funds for the child’s benefit (including education and medical expenses) but must follow the statute and any court orders. Confirm the exact South Dakota code sections that govern custodial transfers before relying on this approach.
• Special needs trust (if the child receives public benefits): If the child receives Medicaid or SSI, using settlement money directly could jeopardize benefits. A properly drafted and court-approved special needs (supplemental) trust can hold settlement funds and preserve eligibility while still paying for extra care, education-related items, or therapies not covered by public benefits. Court approval and careful drafting are essential.

Typical court process to get early access

1. File a petition to approve the minor’s settlement or to confirm management of the proceeds (many courts require this for personal-injury settlements involving minors).
2. Appoint a guardian ad litem or minor’s attorney to investigate and report to the court.
3. Provide a proposed plan for the funds—for example, a request that up to $X be released now for college tuition, or that the funds be placed in a trust or annuity that pays education expenses directly.
4. Attend a hearing where the court evaluates whether the requested use is in the child’s best interest.
5. If granted, the court issues an order specifying how funds are to be distributed or managed; distributions must follow that order.

Practical examples

Example 1 (college bills): Parents petition the court to approve withdrawal of $20,000 from a $60,000 settlement to pay a college bill. The court reviews the tuition invoice, financial aid, and whether leaving the remainder protected is in the child’s best interest. If the judge is satisfied, the court orders payment directly to the college or allows the conservator to pay the bill.

Example 2 (medical care): A minor needs expensive, out-of-pocket therapy. The guardian asks the court to release settlement funds to pay the provider. The court may require documentation from providers and possibly a plan showing why public insurance or other sources cannot cover the costs.

Key risks and special issues

• If the child receives Medicaid, SSI, or other means-tested benefits, direct access to settlement funds can cause loss of benefits. Use a special needs trust or get specific court guidance to avoid harm to benefits.
• Courts will scrutinize requests. Be prepared with invoices, quotes, a written budget, and evidence that the use is necessary and reasonable.
• Misuse of funds by a guardian or conservator can lead to court sanctions, removal, and repayment orders. Detailed accounting is usually required.
• Tax consequences can vary based on how the money is used and structured; consult a tax advisor.

What you should do next

• Talk with a lawyer experienced in South Dakota minor settlement and probate matters. They can prepare petitions, represent the minor’s interests, and make the appropriate requests to the court.
• Gather documentation: settlement papers, medical bills, school tuition invoices, financial-aid statements, and any records showing the minor’s current benefits.
• Discuss whether a structured settlement, conservatorship, custodial account, or special needs trust is appropriate for long-term protection of funds.
• If public benefits are involved, consult an attorney experienced with special needs planning before requesting distribution.
• Ask the attorney to identify the relevant South Dakota statutes and court forms for your county and to seek a hearing as needed.

Helpful Hints

• Do not assume a parent can simply spend the settlement for the child’s benefit; court permission is often required for large amounts or settlements tied to a court order.
• Bring clear, contemporaneous invoices or enrollment statements to the court to support any request for early distributions for college or medical costs.
• Consider requesting payment be made directly to the school or medical provider rather than released into a checking account.
• If the settlement is large, consider structuring payments to match major life events (tuition dates) while keeping protection for future needs.
• If your child receives Medicaid or SSI, ask about a special needs trust immediately—incorrect handling can interrupt necessary benefits.
• Ask whether your county has local procedures or standardized forms for approving minor settlements—local practice can speed the process.

Relevant South Dakota legal resources

South Dakota Codified Laws (search all statutes): https://sdlegislature.gov/Statutes/Codified_Laws

Look under probate/guardianship provisions (Title 29A) and any sections addressing approval of settlements for minors or conservatorship/guardian of the estate. Your attorney can point to the exact sections that apply to your case and link the filings to local court rules.

Disclaimer: This is general information only and not legal advice. Laws vary by case and change over time. Consult a licensed South Dakota attorney about your specific situation before taking action.