Detailed Answer

Short answer: In Nevada, using an annuity to manage settlement money for a child (a minor) is common and usually requires court involvement. A parent or guardian generally must get court approval to accept and place settlement funds for a minor, and the court will approve the method for holding or distributing funds—such as a blocked account, a court‑supervised trust, or the purchase of an annuity. See Nevada’s guardianship statutes for governing authority and procedures: NRS Chapter 129 (Guardianship).

Step-by-step process under Nevada law (practical workflow)

1. Confirm who has legal authority to act: If the child already has a legal guardian, that guardian acts on the child’s behalf. If not, the court may appoint a guardian or a guardian ad litem to review and approve any settlement on the minor’s behalf (procedures and authority are in NRS Chapter 129).
2. File for court approval of the settlement: Most courts require a petition or motion asking the court to approve a settlement for a minor. The petition should explain the case, the settlement amount, who will receive funds, and propose how the funds will be protected for the child’s benefit.
3. Propose the annuity and provide documentation: If you propose using an annuity, submit the proposed annuity contract, the insurer’s financial information, and a clear explanation of payment schedule (lump sum vs. periodic payments, guaranteed period, survivor options). The court will consider whether the annuity is in the child’s best interest.
4. Court hearing and entry of an order: The court may hold a hearing. If it approves, the judge will enter an order authorizing the settlement and the purchase of the annuity or placement of funds as ordered. The order may require that proceeds be paid directly to the annuity issuer, placed in a blocked account, or paid into a trust.
5. Purchase and administration: After the order, the defendant/insurer (or plaintiff’s attorney, depending on the arrangement) will purchase the annuity per the court order. The annuity issuer then makes payments as specified (to the child, guardian, or trustee per the court’s direction).

Key legal and practical considerations

• Court approval is commonly required: Nevada courts supervise settlements and guardians’ actions to protect minors from unfair or unsuitable dispositions of funds (see NRS Chapter 129).
• Types of mechanisms: Options include blocked bank accounts (funds cannot be withdrawn without court permission), a court‑supervised guardianship trust, a special needs trust (if the child receives Medicaid/SSI), or a structured settlement (annuity) that pays over time.
• Public benefits impact: If the child receives or might receive Medicaid or Supplemental Security Income (SSI), an ordinary annuity that pays directly to the child could disqualify benefits. A properly drafted special needs trust or pooled trust may be necessary to preserve eligibility. Consult counsel experienced with public benefits planning.
• Tax and payment design: Structured settlements offer predictable periodic payments and sometimes favorable federal tax treatment (certain periodic payments from personal physical injury settlements can be tax‑advantaged). Work with counsel and a qualified advisor to design payment timing, survivor benefits, inflation protections, and contingencies (death of annuitant, insurer insolvency).
• Insurer/annuity company strength: The court will want assurance the annuity issuer is financially secure. The judge may require evidence of the issuer’s ratings or a guarantee arrangement.
• Costs and fees: There may be legal fees, guardian ad litem fees, court costs, and annuity transaction costs. Courts typically review fee reasonableness before approving a settlement.

Common examples (hypotheticals)

Hypothetical A: A parent settles a car‑accident claim on behalf of a 7‑year‑old. The court approves a structured settlement where the insurance company buys an annuity that pays the child modest annual amounts until age 18, a larger sum at age 21, and another at age 25. The judge approves because payments meet the child’s needs and protect funds from waste.

Hypothetical B: A settlement would push a child off Medicaid. The court approves placing funds into a special needs trust (instead of direct annuity payments) to maintain benefits while allowing for supplemental care.

When to talk to an attorney

You should consult a Nevada attorney experienced in minors’ settlements, guardianship administration, and benefit‑protecting trusts before finalizing any plan. An attorney will prepare the required petition, present the annuity proposal to the court, and coordinate with financial/insurance professionals and the annuity issuer.

How long it takes: Timeline varies by county and court load. Expect paperwork and hearings that can take several weeks to a few months from settlement agreement to annuity purchase and first payment.

Where to find Nevada legal resources

Primary state law on guardianship and fiduciary duties is in NRS Chapter 129: https://www.leg.state.nv.us/NRS/NRS-129.html. For county‑specific procedural forms or local rules, check the Nevada Judiciary website for your county’s district court forms and local rules.

Disclaimer

This article is educational only and is not legal advice. It does not create an attorney‑client relationship. For guidance tailored to your situation, consult a licensed Nevada attorney.

Helpful Hints

• Start early: obtain court approval language and proposed annuity documents before finalizing the settlement agreement.
• Ask the insurer to buy the annuity directly (so the payments are guaranteed by the issuing company and flow as ordered by the court).
• Confirm the annuity issuer’s financial strength (rating reports) and include that info in the court filing.
• Consider a special needs trust if the child receives or may need means‑tested public benefits.
• Request a guardian ad litem if the court or parties think independent review is needed; courts commonly require one for minor settlements.
• Document all proposed fees (attorney, guardian ad litem, trustee) and justify them to the court to avoid delays or reductions.
• Discuss payment structure with financial and tax advisors: immediate lump sums, periodic fixed payments, escalating payments, or hybrid options each have pros and cons.
• Keep copies of the court order, annuity contract, and insurance correspondence accessible for future administration and proof of authority to receive payments.