Detailed answer — what usually happens and the steps you should expect

Short answer: You generally cannot simply place a child’s settlement check into an account and spend it. In Maine, settlement funds for a minor’s claim typically require court involvement or a court-approved guardian/conservator to protect the child’s financial interests. A common, protective approach is to buy a structured settlement annuity or to place funds in a court-approved trust. Below are the typical steps and options, explained in plain language.

1) Determine whether court approval or a guardian of the estate is required

If the settlement resolves a claim for a minor, the probate court usually must approve the settlement or must appoint a guardian of the minor’s estate who will manage the funds on the child’s behalf. Contact the Maine probate court that serves the child’s residence to confirm the local practice and filing requirements. The Maine Judicial Branch has resources for probate matters: https://www.courts.maine.gov/.

2) Decide between structured settlement annuity versus trust or custodial account

Common options:

• Structured settlement annuity — A life-insurance company sells an annuity that pays periodic sums (for example monthly or yearly) to the child. The annuity can be shaped to provide guaranteed payments, lump sums at future ages, or a life-contingent stream of income. Courts often view structured settlements favorably because they protect funds by providing predictable payments.
• Guardianship/conservatorship account — The court appoints a guardian of the child’s estate (sometimes called a conservator). The guardian manages invested funds and must report to the court about account activity and use of funds for the child’s benefit.
• Trust (including special needs trust) — If the child receives public benefits (MaineCare/Medicaid, SSI), a properly drafted trust (often a third-party supplemental needs trust) can protect eligibility while providing for extra needs. A qualified attorney should draft this to meet program rules.

3) If you choose a structured settlement annuity: practical steps

1. Work with the child’s lawyer and/or a licensed structured settlement broker to obtain multiple annuity proposals from life insurance companies that write structured settlements.
2. The proposals should show the payment schedule (amounts, start dates, duration), the insurer’s name, the purchase price (how much of the settlement will buy the annuity), and the present value/actuarial basis.
3. File a petition with the probate court seeking approval of the settlement and asking the court to approve purchasing the annuity (or to appoint a guardian with authority to accept the annuity). Include the settlement agreement, annuity contract or issuer quote, and a proposed court order explaining why the annuity is in the child’s best interest.
4. The court reviews whether the terms are in the minor’s best interest and whether the guardian (or parent) is acting properly. If approved, the court signs an order allowing the insurer to issue the annuity or allowing the guardian to complete the purchase.
5. After court approval, the settlement funds flow to the insurer or trustee to purchase the annuity; the insurer begins making the approved payments to the child (or to a guardian for the child if required by the award/order).

4) What information the court wants to see

Courts typically require:

• The full settlement agreement and allocation of settlement proceeds;
• Copies of annuity purchase proposals or contract terms;
• A declaration or affidavit explaining why the proposed payment schedule is appropriate for the child’s needs;
• If a guardian is involved, documentation of the guardian’s qualifications and bond (if required by the court); and
• A proposed order granting approval and directing how funds are to be paid and administered.

5) Special situations to consider

• If the child has a disability and receives public benefits, do not place settlement money in the child’s name or an ordinary account without first addressing benefit protection. A special needs trust may be needed to preserve MaineCare/SSI eligibility.
• If you want lump sums at specific future ages (college, age 18, age 25), structured settlements can include scheduled lump payouts tied to those ages.
• If you anticipate changing the annuity or selling periodic payments later, be aware that state law and buyer markets may restrict or reduce value of payments sold; the court or statute may require notice or approval before factoring future payments.

6) Who should help you

Key professionals to involve:

• A Maine attorney experienced in settlements and probate who can prepare the court petition and proposed order.
• A licensed structured settlement broker or financial professional who can obtain competitive annuity offers and explain insurer credit quality and contract details.
• If benefits are involved, an attorney experienced with public benefits and special needs planning to draft any required trust documents.

7) Regulatory and insurer considerations in Maine

Maine regulates annuities and insurance through the Maine Bureau of Insurance. Verify that the annuity issuer is licensed to do business in Maine and that the contract conforms to Maine insurance requirements. For information on insurer regulation and consumer protections, see the Maine Bureau of Insurance: https://www.maine.gov/pfr/insurance/.

Helpful hints — practical tips for a smooth process

• Start with the child’s lawyer or the claims attorney: they typically handle obtaining the annuity quotes and preparing the court papers.
• Get at least two annuity offers so the court can see competitive pricing and terms.
• Ask the insurer for a written payment schedule and the annuity contract details before filing for approval.
• Keep careful records and plan for periodic court reporting if you will be acting as guardian of the estate.
• If the child receives public benefits, consult a special needs attorney first to avoid unintentionally disqualifying benefits.
• Confirm the annuity issuer’s credit rating and Maine licensing status through the Maine Bureau of Insurance.
• Expect the probate court to require proof that the chosen arrangement serves the child’s best interest; bring written explanations from financial advisors if helpful.
• If you need immediate funds for the child’s care, discuss interim arrangements with the court or the child’s attorney so urgent expenses are covered while the court process runs.

Where to find official Maine resources

• Maine Judicial Branch (probate court information): https://www.courts.maine.gov/
• Maine Bureau of Insurance (annuity and insurer information): https://www.maine.gov/pfr/insurance/

Disclaimer: This article explains general processes under Maine practice and is for educational purposes only. It does not constitute legal advice. Consult a Maine-licensed attorney about your specific situation before taking action.