FAQ — Accessing a Minor’s Settlement Money Before Age 18 in Michigan

Short answer: Sometimes. In Michigan, parents or caregivers cannot automatically spend a minor’s settlement funds as they please. To access settlement money before the child turns 18 for college or medical bills, you normally must get approval from the probate court or use a court‑approved mechanism (for example, a guardianship of the estate, a court‑approved trust or a blocked account). The court’s decision focuses on the minor’s best interests and proof of need. This is a general explanation, not legal advice.

Detailed answer — how it works under Michigan law

When a child (a person under 18) receives money from a lawsuit, insurance payout, or wrongful‑death settlement, Michigan’s probate system treats that money as the child’s property. Because minors cannot generally manage their own property, the probate court steps in to protect the child’s financial interests and to decide how and when the funds may be used.

Although state law and local practice vary in detail, the steps and options below reflect the typical Michigan process and choices parents and attorneys use to obtain access for education or medical needs:

1. Petition the probate court to approve the settlement or to manage the funds

If a settlement involves a minor, the parties normally file a petition in the county probate court asking the judge to approve the settlement and to direct how the money will be handled. The court may also be asked to appoint the parent (or another adult) as guardian of the minor’s estate so that person can manage funds on the minor’s behalf.

Why court approval? The judge must ensure the settlement is fair and that the child’s money receives appropriate protection. The judge can also approve limited distributions for specific needs such as college tuition or ongoing medical care.

2. Common court‑approved structures to hold and control the money

• Blocked (restricted) bank account: The court orders the settlement placed into an account that requires court permission or a guardian’s signature for withdrawals.
• Court‑supervised guardianship (guardian of the estate): A guardian of the minor’s estate can receive and spend money for the minor’s benefit, but the guardian must account to the court periodically.
• Trust for the child: The parties or the court can create a trust (often a spendthrift or special needs type) to hold funds until a stated age or until conditions are met. The trustee administers distributions under trust terms approved by the court.
• Structured settlement annuity: Payments can be set up to pay out over time; the court can approve this arrangement for the minor’s long‑term security.

3. Getting early access for college or medical expenses

The probate judge has discretion to allow early (partial or full) distribution of funds before the child reaches majority if the petition demonstrates that the proposed distribution serves the child’s best interests. Common justifications courts accept include:

• Payment of college tuition or related education expenses (tuition, room & board billed directly to the school, required fees).
• Payment of medical or rehabilitative expenses related to the injury that produced the settlement, where insurance does not cover them.
• Purchases that reasonably further the child’s care, therapy or education.

Courts typically require documentation: cost estimates, itemized invoices or school billing, medical records, expert statements about ongoing medical needs, and a proposed plan showing how the remaining funds will be protected.

4. Tax and financial planning considerations

Settlement money may have tax implications depending on the nature of the award. If the funds are placed into a trust or annuity, plan for trustee fees, possible investment returns and reporting obligations. Courts will often review attorney fees and guardian compensation as part of the approval process.

5. Practical example (hypothetical)

Suppose a 16‑year‑old receives a settlement of $120,000 after a car injury. The parent petitions the probate court to (a) approve the settlement, (b) appoint the parent as guardian of the estate, and (c) permit the guardian to pay upcoming college tuition of $25,000 directly to the university. The petition attaches the university bill, medical records showing ongoing needs, and a proposed trust for the remaining $95,000. If the judge finds the plan in the minor’s best interest, the court can approve the limited distribution and enter orders to protect the remainder.

What you should do next

1. Talk with an attorney experienced in Michigan probate/minor settlements. They can prepare and file the petition the probate court requires.
2. Collect supportive documents: settlement agreement, proof of the child’s bills (tuition invoices, medical bills), medical records and a written plan for the remaining funds.
3. File the petition in the county probate court where the minor lives; attend the hearing and be prepared to explain why the requested distribution benefits the child.

Relevant Michigan resources

For the statutory framework and local forms, see the Michigan Legislature and Michigan Courts websites. The probate court handles guardianships, conservatorships and approval of minor settlements. You can search Michigan statutes and court rules at these official sites:

• Michigan Legislature (search Michigan Compiled Laws, e.g., provisions of the Estates and Protected Individuals Code)
• Michigan Courts (probate court information and court forms)

Helpful Hints

• Start early: court petitions and hearings take time; plan ahead of college enrollment dates.
• Provide direct billing when possible: courts often prefer paying a school or hospital directly rather than disbursing cash to a parent.
• Keep thorough records: save invoices, contracts, receipts and medical documentation to show the court the funds were used for the child’s benefit.
• Expect court oversight: guardians must file periodic accountings; the court will review attorney fees and guardian compensation.
• Consider a trust or structured settlement for long‑term care and to protect future eligibility for public benefits if applicable.
• Consult a probate attorney: local practice and judges’ expectations vary by county; a lawyer will tailor your petition to local rules and the judge’s likely concerns.

Disclaimer: This article explains general Michigan procedures and common options. It does not provide legal advice. For advice specific to your situation, consult a licensed Michigan attorney who handles probate or minor‑settlement matters.