Understanding how minor settlement funds are protected in Wisconsin

When a minor receives settlement money (for example, from a personal injury lawsuit or insurance claim), the law treats that money as belonging to the child. The state protects those funds until the child reaches the age of majority (18 in Wisconsin). There are a few common ways the funds are handled:

• Held in a court-approved settlement account or trust until the child turns 18.
• Placed into a custodial account under state transfer-to-minors law or other custodial arrangement where a custodian manages the money for the child’s benefit.
• Paid through a structured settlement (an annuity) that pays the child periodically, possibly beginning before age 18 depending on the terms.
• Managed by a guardian/conservator approved by a court (a formal guardianship or protective proceeding).

Wisconsin statutes and the Wisconsin court system supervise many of these processes to protect the minor’s interests. For general statutes and court resources, see the Wisconsin Legislature site (https://docs.legis.wisconsin.gov/statutes) and the Wisconsin Courts site (https://www.wicourts.gov).

Common legal routes to get funds for college or medical bills before age 18

Here’s how people commonly obtain access to a minor’s settlement money for education or medical expenses in Wisconsin:

1. Ask the court to approve a specific expenditure or partial distribution.

   If the settlement is under court supervision (or if you petition the court), you can ask the judge to authorize release of part of the settlement for particular expenses like tuition, room and board, special education, or medical bills. The court will weigh whether the proposed use is in the child’s best interest and whether alternative funding exists.

2. Use a custodial account (transfer-to-minors / custodial arrangement).

   If the settlement is placed into a custodial account under state transfer-to-minors law (a custodial account where a designated adult is the custodian), the custodian may be allowed to spend money on the minor’s benefit, including education and medical needs. The custodian still has fiduciary duties: funds must be used for the child’s benefit.

3. Structured settlement with early payments.

   Parties can negotiate structured settlements that provide periodic payments timed to anticipated needs (for example, payments that begin when the child reaches college age). Structured settlements must be set during the settlement and approved by the court if required.

4. Establish guardianship or conservatorship over the child’s estate.

   If there is no existing custodial arrangement and substantial assets need ongoing management, a court-ordered guardian or conservator of the estate can manage the funds and request court approval to pay for education or medical costs as needed.

What the court considers when deciding whether to release funds early

Wisconsin courts decide on early access based on the child’s best interests. Typical factors include:

• How large the settlement is and how quickly a distribution would deplete funds meant to support the child long-term.
• Whether the requested expense is necessary (e.g., unavoidable medical bills) versus optional or discretionary.
• Availability of other funding sources (insurance, scholarships, parental resources).
• Specific evidence: cost estimates, school billing statements, physician bills, and a proposed budget showing how the distribution will be used and how remaining funds will be preserved.
• Whether an alternative arrangement (structured payments or custodial account rules) could meet the child’s needs without a lump-sum payout.

Practical steps to request early access in Wisconsin

If you want to ask the court to release funds early for college or medical expenses, consider these steps:

1. Collect documentation: settlement papers, medical bills, college cost estimates, financial aid results, and any insurance records.
2. Draft a clear proposed plan: how much you need, why it’s necessary, and how you will use remaining funds to protect the child’s future.
3. File a petition in the appropriate Wisconsin county probate or family court (the court handling the settlement or the court with jurisdiction over the minor’s estate). The court may require a hearing and notice to interested parties.
4. Be prepared for the court to require an accounting, potential bonding, or appointment of a guardian ad litem or conservator of the estate to protect the child’s interests.
5. Consider negotiating a structured settlement or custodial arrangement with the defendant/insurer before asking the court for a premature distribution.

For general court forms and information, check the Wisconsin Courts website: https://www.wicourts.gov. For statutory context about guardianship and protective proceedings, see the Wisconsin statutes at the Legislature site: https://docs.legis.wisconsin.gov/statutes.

Typical timelines and likely costs

Expect the process to take weeks to months depending on how complex the settlement and the petition are. Costs may include filing fees, attorney fees, court-appointed guardian ad litem fees, and possibly bonding or ongoing accounting costs. Courts often try to ensure the minor’s long-term security, so they do not routinely approve rapid, large lump-sum distributions unless clearly justified.

Example (hypothetical)

Jane’s 16-year-old child received a $120,000 settlement for injuries. College is two years away and Jane requests $30,000 now to prepay tuition and cover necessary rehabilitation that insurance won’t pay. Jane files a petition, provides college invoices and rehabilitation estimates, and proposes keeping the remainder in a court-approved custodial account. The judge may approve the $30,000 for the stated needs and order the remainder preserved or managed under a conservatorship or custodial arrangement.

When to talk to an attorney

If you are considering asking a Wisconsin court to release a minor’s settlement funds, consult an attorney experienced with Wisconsin probate or family court proceedings. An attorney can prepare the petition, present the documentation the court will expect, and suggest alternatives (structured settlement language, custodial accounts, or guardianship strategies) that may increase your chances of approval.

Finding a lawyer quickly is particularly important if the money is needed for urgent medical care.

Helpful hints

• Start gathering bills, school cost estimates, and insurance denials early — the court will want concrete evidence of need.
• Propose a narrow, specific release (e.g., tuition invoice payment) rather than asking for a large unrestricted lump sum.
• Consider a structured settlement or custodial account terms that allow scheduled payments aligned with college or care timelines.
• Expect the court to require an accounting and ongoing oversight if it authorizes early access.
• Keep records of how any released funds are spent — courts or future auditors may request proof that the funds benefited the child.
• Contact the Wisconsin Courts Self-Help Center or local county court clerk for procedural guidance if you plan to file a petition yourself: https://www.wicourts.gov.