How parents can get a child’s settlement money early under Indiana law

Disclaimer: This is general information and not legal advice. Laws change and every case differs. Consult a licensed Indiana attorney or your local probate court before acting.

Detailed answer — short version

Yes — sometimes. In Indiana a parent or guardian cannot simply spend a minor’s settlement money for college or medical bills without court authority (or without the terms of a settlement or trust allowing it). The probate court (or the settlement approval process) usually controls how a minor’s settlement is held and when money can be withdrawn. To use funds before the child turns 18 you typically must get the court’s permission (or have the funds placed in an account or trust that permits distributions for education or medical needs).

Why the court controls a minor’s settlement funds

When a minor receives money because of an injury, claim, or as the result of a lawsuit, Indiana courts protect the child’s property. The court often must approve settlements for minors or supervise how settlement proceeds are held and disbursed so the money benefits the child and not the child’s creditors or others.

Relevant state law about probate and guardianship resides in Indiana’s probate code (see Indiana Code, Title 29). For an overview of probate and guardianship procedures in Indiana, see the Indiana General Assembly’s Title 29 pages: https://iga.in.gov/legislative/laws/current/ic/titles/29. For practical court information, see the Indiana Judicial Branch: https://www.in.gov/judiciary/.

Common ways a minor’s settlement is handled

• Blocked or restricted account: The court orders the funds placed in an account that requires a court order to withdraw principal.
• Structured settlement or annuity: Periodic payments are purchased through an annuity; payments are made according to the agreed schedule.
• Trust for the minor: A trust (including a special needs trust, if appropriate) can govern distributions for education, medical care, and other needs.
• Guardianship or conservatorship of the estate: A guardian or conservator (sometimes called a guardian of the estate) manages the funds under court supervision.

How to request funds early for college or medical expenses

Follow these general steps. Courts expect evidence that the requested withdrawal benefits the minor.

1. Check the settlement order or trust terms. Some settlement approvals, structured settlement contracts, or trust documents include express rules for early distributions for education or health care. If the document allows such uses, you can follow those rules.
2. If there is no express authorization, file a petition with probate court. The parent, guardian, or conservator files a petition (often called a Petition to Approve Expenditure, Petition to Approve Use of Funds, or Petition for Instruction/Distribution) asking the court to authorize payment for specified expenses. The petition should describe the expense, show invoices or cost estimates (tuition bill, medical bills), and explain why the withdrawal benefits the child.
3. Provide documentation. Typical proof includes school acceptance letters and tuition invoices, medical provider bills or treatment plans, estimates, and a proposed budget showing how the distribution will be used for the child’s direct benefit.
4. Notice and hearing. Indiana probate procedure usually requires notice to interested parties (the minor, the guardian ad litem if appointed, and any other interested persons). The court may hold a hearing and then either approve or deny the petition or approve a partial distribution.
5. Follow the court order. If the court allows a distribution, it will issue an order stating how much and for what purpose. The bank or trustee will release funds consistent with that order.

What courts consider when deciding requests

• Whether the expense directly benefits the minor (education, medical care, rehabilitation).
• The amount requested compared to the total settlement or trust balance.
• Whether a lesser amount (or payment directly to the provider, such as the college or hospital) would satisfy the need.
• Whether the withdrawal will leave the child with enough funds for future needs.
• The existence of alternative funding sources (insurance, scholarships, financial aid).

Practical examples (hypothetical)

Example 1: A 17-year-old has a $60,000 settlement in a court-ordered blocked account. The child is accepted to a public university with a $10,000 tuition bill due. The parent files a petition showing the acceptance letter and invoice. The court often will approve a direct payment to the school for tuition if it finds the payment clearly benefits the minor.

Example 2: A child needs surgery that insurer won’t cover and the settlement is in an annuity. The parent asks the court to allow a lump-sum or early annuity payment to cover the medical procedure. The court looks for medical records and cost estimates, and may permit a distribution if it is in the child’s best interests.

Tax and student aid considerations

• Settlement funds used for medical expenses or to replace earnings may have different tax treatment. Talk to an accountant before large withdrawals.
• Large deposits or distributions can affect financial aid eligibility (FAFSA). A financial aid advisor can explain timing and reporting rules.

When to get legal help

Hire an Indiana attorney if you need help drafting a petition, representing you at a hearing, or negotiating settlement terms that preserve the child’s interests. An attorney can also advise on tax and financial aid consequences. If the case involves a special needs child, consult a lawyer experienced in special needs trusts and public benefits planning.

Helpful links

• Indiana Code, Title 29 (Probate Code): https://iga.in.gov/legislative/laws/current/ic/titles/29
• Indiana Judicial Branch (probate and court information): https://www.in.gov/judiciary/

Helpful hints

• Do not spend the minor’s settlement funds without court authorization or explicit settlement/trust language permitting it.
• Collect and submit clear documentation (bills, invoices, letters) showing how the money will directly benefit the child.
• Ask the court to pay providers directly (college, hospital) rather than giving cash to a parent.
• Consider structuring distributions (partial releases) so the child retains funds for later needs.
• Talk to a financial aid counselor before using settlement money for college; timing matters for FAFSA reporting.
• If the child has disabilities, explore a special needs trust to protect benefits like Medicaid or SSI.
• Contact your local probate court clerk for forms and local procedures before filing a petition.

If you want, tell me (a) whether the settlement has already been court‑approved or is still being negotiated and (b) the type of expense (tuition, medical procedure, ongoing care). I can then outline the likely petition steps and a short checklist of documents.