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Quick summary: To set up an annuity for settlement funds for a child in Connecticut you will usually (1) obtain court approval of the settlement or a court order directing how funds will be held for the minor, (2) choose the right vehicle (a structured settlement annuity, a trust, or a custodial account), (3) select a reputable annuity issuer and purchase the annuity consistent with the court order, and (4) address tax, benefits, and trustee/guardian duties. Below is a step‑by‑step explanation of how this commonly works in Connecticut and the practical issues to consider.

1. Why court approval is often required

When a settlement resolves a legal claim by or for a minor (for example, a personal injury claim), Connecticut courts and probate judges typically require a judicial or probate approval before the claimant receives funds. Court approval protects the child’s interests and can require specific arrangements (trusts or annuities) to preserve the funds. For procedural information and local probate contacts, see the Connecticut Probate Courts website: https://www.ctprobate.gov/ and the Connecticut General Assembly website for statute research: https://www.cga.ct.gov/.

2. Choose the right vehicle for the child’s funds

The three common ways to hold settlement money for a minor are:

• Structured settlement annuity (periodic payments) — The defendant or insurer purchases an annuity from an insurance company that makes regular payments to the child or to a trustee on a scheduled basis (for life, for a set number of years, or in a blended schedule). This can protect funds from being spent too quickly and can provide predictable income.
• Trust (court‑approved or special trust) — A trustee (often a parent, bank, or trust company) manages funds held in trust for the child. A trust can be tailored (e.g., for education, medical care, living expenses) and can include provisions to protect benefits if the child receives public benefits.
• Custodial account (UTMA/UGMA style) — In some states the parent can hold funds in a custodial account for a minor; however, custody rules and age of transfer vary and may not offer the protections a trust or structured settlement provides. Connecticut procedures for custodial holdings or trust arrangements will involve court oversight when the funds arise from litigation.

3. Typical steps to set up an annuity for the child

1. Hire or consult a Connecticut attorney experienced in minor settlements. An attorney will help draft the settlement, prepare the petition for court or probate approval, and advise about trust versus annuity options. Courts expect the terms to protect the minor’s long‑term interests.
2. Draft the settlement terms. The settlement agreement should describe if payments will be made as a lump sum to a trust or as an annuity. If the defendant will purchase an annuity, the agreement should name the annuity purchaser, the annuity issuer, the payee (the minor or the minor’s trustee), the payment schedule, and any contingencies.
3. File for court or probate approval. Submit the settlement and proposed distribution plan to the appropriate Connecticut court or probate judge. The filing should explain why the chosen arrangement (annuity or trust) serves the child’s best interest. The court may require a hearing and may appoint a guardian ad litem or require independent counsel for the child.
4. Select an annuity issuer. Work with the insurer approved in the settlement order. Use a highly rated life insurance company (check ratings such as A.M. Best) and confirm the product type (immediate vs. deferred, fixed vs. indexed). You can check insurer licensing and consumer information with the Connecticut Insurance Department: https://portal.ct.gov/cid.
5. Purchase the annuity and transfer funds as ordered. After court approval, the insurer or defendant will fund the annuity according to the settlement order. The annuity contract should name the payee exactly as the court order requires (for example, “Trustee of the [Child’s Name] Trust” or “[Child’s Name] c/o Trustee”).
6. Implement trustee or guardian duties. If a trustee will receive annuity payments, that trustee must administer funds according to the trust terms and any court directives. Keep careful records and provide accountings if the court requires them.

4. Special issues to address in Connecticut

Medicaid, SSI, and public benefits: If the child receives or may receive means‑tested benefits, improper placement of settlement funds may disqualify them. For children with disabilities, consider a special needs trust to preserve eligibility for public benefits. Connecticut Department of Social Services resources: https://portal.ct.gov/DSS.

Tax considerations: Portions of a personal injury settlement (e.g., compensatory damages for physical injury) are typically non‑taxable, but interest, punitive damages, or portions allocable to lost earnings may have tax implications. Consult a tax advisor before finalizing the settlement and annuity structure.

Creditors and spendthrift protection: A structured settlement or properly drafted trust can provide creditor protection in some circumstances. The exact protection depends on the type of vehicle and applicable law.

Changing annuity payments later: Courts generally protect structured settlement payments. Selling or assigning future payments often requires court approval as a transfer and must comply with applicable protective statutes and court rules.

5. Who should you involve?

• An experienced Connecticut plaintiff/settlement attorney or probate attorney to prepare filings and obtain court approval.
• A financial advisor or insurance broker with experience in structured settlements to evaluate annuity products and insurers.
• An accountant or tax advisor to assess tax consequences.
• If the child has disabilities, an attorney experienced in special needs planning to consider a special needs trust and public benefits impact.

Practical timeline: The time from agreement to active annuity payments depends on how quickly the court approves the plan and how fast the insurer issues the annuity. Expect at least several weeks to a few months in many cases.

Where to research Connecticut law and court contacts: Connecticut Probate Courts: https://www.ctprobate.gov/; Connecticut General Assembly (statutes and legal research): https://www.cga.ct.gov/; Connecticut Insurance Department: https://portal.ct.gov/cid; Connecticut Department of Social Services: https://portal.ct.gov/DSS.

Disclaimer: This article is for general informational purposes only and is not legal advice. It does not create an attorney‑client relationship. For advice tailored to your situation, consult a licensed Connecticut attorney.

Helpful Hints

• Start by consulting a Connecticut attorney experienced with minor settlements and probate procedures—do this before signing a settlement.
• Consider a structured settlement annuity when you want long‑term, guaranteed periodic payments and protection from immediate depletion.
• If the child receives public benefits, investigate a special needs trust before choosing an annuity or lump sum option.
• Only buy annuities from financially strong, licensed insurers. Check ratings and Connecticut licensing with the Connecticut Insurance Department: https://portal.ct.gov/cid.
• Ask the court to name the beneficiary exactly as your annuity or trust documents require to avoid delays when funds are paid.
• Keep careful records of court orders, the annuity contract, trust documents, and all accountings—courts may require periodic reports.
• If someone offers to buy future payments, be very cautious: transferring structured settlement payments often requires court approval and may not be in the child’s best interest.
• Get separate financial and tax advice before finalizing the settlement structure to avoid unintended tax or benefits consequences.
• Expect the court to require evidence the settlement and annuity plan are in the child’s best interest—prepare clear justifications for the proposed structure.