Detailed answer — how the process usually works in Massachusetts

When a minor receives settlement funds (for example, from a personal-injury case), Massachusetts courts generally must review and approve how those funds will be handled. Common court-approved options include:

• buying an annuity (a structured stream of periodic payments),
• placing funds in a court-approved blocked or restricted bank account,
• creating a trust for the child, or
• appointing a guardian or conservator to manage the funds under court supervision.

Below are the practical steps to set up an annuity for settlement money that will protect the child’s interests and comply with Massachusetts practice:

1) Confirm court approval is required and where to file

Most minor settlements require approval by the Probate and Family Court (the court that handles guardianship, conservatorship, and minor settlement approvals in Massachusetts). Start with the Probate and Family Court in the county where the matter was filed or where the child lives. The court will tell you the exact documents and forms to file.

Massachusetts Probate & Family Court resources and local information: https://www.mass.gov/orgs/probate-and-family-court.

2) Prepare the petition for approval of a minor’s settlement

A petition typically asks the court to approve the settlement terms and to order how the settlement funds should be handled (for example, to permit purchase of an annuity). The petition package often must include:

• the settlement agreement and release,
• a proposed plan for the money (annuity contract terms or trustee/blocked account paperwork),
• an affidavit or report from counsel for the minor (and sometimes counsel for the parents),
• a proposed order for the judge, and
• in many cases, an independent evaluation (for example, a guardian ad litem report or recommendation) showing the settlement is fair and in the child’s best interest.

Check the court’s local procedures and forms early. General Probate and Family Court forms: https://www.mass.gov/guides/probate-and-family-court-forms.

3) Decide what kind of annuity you want

Common annuity options for settlement funds:

• Immediate (single-premium) annuity: The insurer begins periodic payments soon after purchase.
• Deferred annuity / structured settlement: Payments begin at a later date or on a schedule (e.g., annual payments, milestone payments like college tuition, then larger payment at age 18/21).
• Period-certain or life-contingent annuities: Period-certain guarantees payments for a set number of years; life-contingent pays as long as the payee lives (less common for minors unless paired with a period-certain).

Pick the product that matches the child’s needs—education costs, medical care, long-term support, and protection from mismanagement. Consider naming a contingent beneficiary and planning for the child’s death before payouts are complete.

4) Work with counsel, a guardian/custodian, and a licensed insurer

The court may require that the annuity be purchased from a licensed insurance company and that the annuity contract be reviewed by the court as part of the approval. Use insurers licensed to do business in Massachusetts; verify licensing with the Massachusetts Division of Insurance: https://www.mass.gov/orgs/division-of-insurance.

The court may also require that the minor have representation (a guardian ad litem or independent counsel) who supports the transaction as fair and reasonable.

5) File the proposed annuity contract or trust documents with the court

When you file your petition, attach the annuity contract or the trustee agreement that shows:

• who receives payments,
• the payment schedule and start date,
• rights (or limits) to surrender, commutation, or assignment of payments, and
• beneficiary designation.

The judge reviews these documents to ensure the annuity protects the minor’s interests. The court may order changes or require additional safeguards (for example, a trust with an independent trustee instead of a direct annuity).

6) Court hearing and order

The court typically holds a hearing (or rules on pleadings) and then issues an order approving the settlement and directing the payer (insurer or defendant) how to disperse funds (for purchasing the annuity, paying attorneys’ fees, setting aside funds in a blocked account, etc.). Follow the court order exactly when purchasing the annuity and distributing funds.

7) Follow-up supervision and recordkeeping

If the court appointed a guardian or imposed reporting requirements, keep accurate records and file required accountings. The court can modify orders if circumstances change.

Tax and transfer considerations

Structured settlement payments from physical-injury settlements often receive favorable federal tax treatment. Tax rules are federal and vary with the type of damages and the way the settlement is structured. Consult a tax advisor about the child’s situation before finalizing the annuity purchase.

Typical timeline and costs

Expect a process that takes several weeks to a few months, depending on the court’s calendar and complexity. Costs may include attorney fees, guardian ad litem or counsel fees, court filing fees, and the price of the annuity (the single-premium amount). Ask the court or counsel whether attorney fees may be paid from the settlement before the annuity purchase.

Example (hypothetical)

Jane Doe, parent and guardian, settles a $250,000 injury claim for her 10-year-old child. The Probate and Family Court requires approval. Jane files a petition seeking court approval to use $200,000 to buy a deferred annuity that pays $2,500 per month starting when the child turns 18, and $50,000 to cover medical expenses and attorney fees. The court appoints counsel for the child, reviews the annuity contract from a Massachusetts-licensed insurer, and approves the plan with a reporting requirement every three years. The insurer issues the annuity per the court order; the court retains jurisdiction for oversight.

Every case differs. Use this example only to understand common steps.

Helpful hints

• Contact the Probate and Family Court early to learn required forms and local procedures. See Mass.gov Probate and Family Court: https://www.mass.gov/orgs/probate-and-family-court.
• Use a Massachusetts-licensed insurer for the annuity and confirm licensing at the Division of Insurance: https://www.mass.gov/orgs/division-of-insurance.
• Expect the court to require independent representation or a guardian ad litem for the child in many cases. The court will appoint or approve this representative.
• Decide whether you need flexibility (e.g., some lump-sum access for medical emergencies) when you design the payment schedule.
• Think about beneficiary designations and survivor protection: name a contingent beneficiary and ensure the court approves how survivor payments will be handled.
• Get written, itemized estimates of legal and guardian fees before filing so the court can evaluate whether the fees are reasonable.
• Ask about the annuity’s commutation and transfer rules. Some annuities are non-assignable, and courts typically scrutinize any sale or factoring of future payments.
• Consult both a Massachusetts attorney experienced in minor settlements and a licensed insurance agent who understands settlement annuities.