Detailed Answer — Step-by-step under Missouri law

When you receive settlement money intended for a minor in Missouri, courts generally require that the settlement be handled in a way that protects the child’s long-term interests. One widely used option is placing settlement funds into an annuity or other structured payment arrangement. Below are the common steps, legal considerations, and practical details to help you prepare and talk with an attorney or the court.

1) Who must be involved and why court approval is usually required

Missouri courts routinely require judicial approval before a minor’s claim is finally settled or significant sums are spent on behalf of a child. That approval can occur in a guardianship or as part of a petition to approve a minor’s compromise. The court’s role is to make sure the settlement is fair and that funds are protected for the child’s benefit.

Key reasons for court involvement:

• The court ensures the settlement amount is reasonable.
• The court approves the mechanism for protecting the money (e.g., annuity, custodial account, minor trust).
• The court confirms the person receiving funds on behalf of the child has authority to manage them.

2) Typical legal routes in Missouri

Common ways to hold settlement funds for a child include:

• Court-approved guardianship of the estate: A guardian of the minor’s estate manages the funds with court oversight. See Missouri statutes on guardianship for procedures and duties (court statutes and forms are available through the Missouri Revisor of Statutes and the Missouri Courts website).
• Compromise of claim / petition to approve minor’s settlement: Sometimes the parties ask the court to approve a settlement and its proposed distribution directly as part of the settlement process.
• Custodial accounts under the Uniform Transfers to Minors Act (UTMA): UTMA custody can hold money for a minor until a statutory age, with a custodian managing the funds. Missouri’s statutes on UTMA explain how custody works in this state.

For Missouri statutes and general information, see the Missouri Revisor of Statutes home page: https://revisor.mo.gov/. For statutes addressing guardianship and related proceedings, see Chapter 475: https://revisor.mo.gov/main/OneChapter.aspx?chapter=475. For transfer-to-minors rules (UTMA), see Chapter 409: https://revisor.mo.gov/main/OneChapter.aspx?chapter=409.

3) How an annuity or structured settlement works for a child

An annuity for settlement funds is usually a contract with a life insurance company that pays a series of guaranteed payments to the child (or to the guardian on the child’s behalf). Typical features include:

• Periodic payments (monthly, quarterly, annually) for a fixed number of years, until a target age, or for life.
• Guaranteed principal and payment schedule if issued by an A-rated insurer; often backed by the insurer’s reserves and regulations.
• Possibility to include inflation adjustment, survivor benefits, or a lump-sum payment at a specified age.

4) Steps to get court approval for an annuity

While exact steps vary by county and judge, this is the typical path:

1. Hire an attorney experienced with minor settlements or guardianship work in Missouri. They prepare the necessary petitions and supporting documents.
2. File a petition with the probate/juvenile court asking the judge to approve the settlement and the specific annuity arrangement. The petition typically lists the settlement terms, explains why an annuity is in the child’s best interest, and attaches the proposed annuity contract or vendor quote.
3. Provide notice to interested parties as required by local rules (parents, insurers, opposing counsel, and sometimes the child’s guardian ad litem or court-appointed attorney).
4. Attend a hearing if the court requires one. Judges often ask about the insurer, security, payment timing, and whether the proposed schedule meets the child’s future needs.
5. If approved, the court signs an order directing how the settlement funds will be paid and held. The order often requires the insurer’s annuity contract and may impose accounting/reporting requirements for the guardian.

5) Practical and contractual considerations when choosing an annuity

• Choose a financially strong, licensed insurance company. Check ratings (A.M. Best, S&P) and confirm the insurer is authorized to do business in Missouri.
• Decide the payment pattern: guaranteed term, payments until a set age (for example, until the child turns 25), or lifetime payments.
• Consider inflation protection and survivor options. A higher guaranteed payment provides more security but may reduce flexibility.
• Confirm transferability or assignability rules: some annuities cannot be sold or transferred easily.
• Court often prefers non-commutable, guaranteed payments payable to the guardian/minor. The judge may require the insurer to provide an unconditional obligation to make the payments.

6) Tax and public-benefits planning

Structured settlement payments often have favorable federal tax treatment if they represent damages for personal physical injury; however, consult a tax advisor to confirm tax consequences for your situation. If the child receives public benefits (Medicaid, SSI), the structure of payments and ownership of funds can affect eligibility—coordinate with a benefits specialist or attorney.

7) Example (hypothetical facts)

Hypothetical: An 8-year-old receives a $200,000 personal injury settlement. The parents and insurer agree on a structured plan. The petitioner asks the probate court to approve an annuity that pays $1,000 per month for 10 years, then $2,000 per month from age 18 to 25, and a final lump sum at age 25. The court reviews insurer strength, the payment schedule, and the guardian’s accounting plan. With court approval, the insurer issues the annuity and sends payments to the guardian, who must file periodic reports as the order requires.

8) Who pays annuity premiums and how funds move

Typically, the settlement payer (insurer or defendant) either buys the annuity directly from an insurance company or deposits funds into a qualified settlement fund or trust that purchases the annuity. The court order directs who buys the annuity and to whom the insurer pays initial sums. The annuity contract then governs the payment schedule.

9) When an annuity may not be best

An annuity might not fit every case. Alternatives include a court-supervised trust, custodial UTMA account, or guardian-controlled bank accounts with court oversight. Consider liquidity needs (education, medical care), flexibility, and the child’s expected future needs.

10) Key documents you will need

• Settlement agreement and proposed distribution schedule.
• Proposed annuity contract or written quotes from the issuing insurer.
• Petition to the court seeking approval; supporting affidavits (guardian, attorney, sometimes a life-care planner for catastrophic injury cases).
• Proof of insurer licensing and financial strength, if relevant to the court.

Because procedures and judges’ preferences vary across Missouri counties, early coordination with a probate attorney will shorten the process and reduce surprises at hearing.

Helpful Hints

• Start with a Missouri probate/guardianship attorney before finalizing any deal. Courts often insist on precise language and documentation.
• Ask the court to approve both the settlement and the precise annuity contract or quote to avoid future disputes.
• Confirm the insurer is licensed in Missouri and check financial-strength ratings.
• Consider a staged payment plan—some immediate funds for current needs plus a long-term annuity for future security.
• If the child receives public benefits, ask whether structured payments will affect eligibility. Coordinate with a benefits attorney if needed.
• Keep detailed records and be prepared for periodic court accounting if you are a guardian of the estate.
• Get more than one annuity quote. Terms and riders vary across insurers and can change the child’s outcome materially.
• Ask whether the proposed annuity is commutable (can be converted into a lump sum) and whether the court will permit commutation in extraordinary circumstances.
• Plan for contingencies: death of a payee, insurer insolvency, or need for early access to funds. Courts and attorneys can suggest protective terms (e.g., survivor benefits or collateral assignments).