Short answer

Under New Mexico law, you usually cannot freely spend or withdraw a minor’s settlement money without court approval or a legally authorized arrangement. Courts oversee settlements for minors to protect the child’s best interest. However, a judge can approve structured arrangements or limited withdrawals for education, medical expenses, or other needs if the request is reasonable and clearly benefits the child.

Detailed answer — how this works in New Mexico

When a minor receives a personal-injury settlement, wrongful-death distribution, or other court-related recovery, New Mexico courts typically require that the settlement be approved and the funds be placed under protective supervision. That supervision can take several forms: a blocked account or juvenile trust, a guardianship/conservatorship (guardian of the estate), or a structured settlement (annuity). The court’s approval protects the minor from losing funds to improper spending and ensures the recovery serves the child’s needs.

Key points about accessing money early for college, medical bills, or other needs:

• Court approval is usually required: A parent or guardian should petition the court to approve the settlement and to request release or partial use of funds for specified expenses. The court evaluates whether the requested use is in the child’s best interest.
• Common court-approved options: The judge may approve (a) a blocked account that allows limited withdrawals with court permission, (b) a guardian/conservator who has authority to manage the funds and can petition to spend them on the child’s behalf, or (c) a structured settlement that pays out periodically or permits designated payments for education or health care.
• Requests must be specific and documented: Courts usually require documentation (school invoices, tuition estimates, medical bills, treatment plans) and a written explanation of why the funds are needed and how the withdrawal serves the child’s long-term interests.
• Attorney fees and liens: Settlement approval will address attorney fees, medical provider liens, and other deductions before funds are placed under supervision. The court may order payment of liens out of the settlement before the blocked account or trust receives the remainder.
• Age of distribution: Unless the court orders otherwise, many arrangements release full control at the state’s statutory age for a minor (commonly 18). Courts can and do authorize earlier or staggered distributions if that protects the child’s interests.

Relevant New Mexico authorities and resources: New Mexico’s courts supervise minors’ settlements and guardianships. For procedural information and forms, see the New Mexico Courts website: https://www.nmcourts.gov. For general state statutes and to research specific statutory language, see the New Mexico Legislature website: https://www.nmlegis.gov.

Typical procedures to request early access for college or medical expenses

1. Talk to the attorney handling the settlement. Your child’s attorney (or the attorney who handled the case) should explain how the court approved the settlement and what protections were ordered (blocked account, guardian, trust, or structured settlement).
2. Prepare supporting documents. Gather tuition invoices, financial aid award letters, medical bills, provider estimates, and any evidence showing that using settlement funds is necessary and will directly benefit the child.
3. File a petition with the court. The petition usually asks the court to approve (a) a one-time release, (b) periodic payments for education or medical care, or (c) authority for the guardian/conservator to spend from the estate. The petition should explain why the spending is in the child’s best interest.
4. Provide notice and attend a hearing. The court may require notice to interested parties (parents, guardian ad litem, insurance carriers). The judge may hold a hearing before deciding.
5. Follow the court’s order. If the court approves, it will issue an order specifying how funds can be used and any reporting or accounting requirements the guardian or payee must follow.

Practical examples

Example A — college tuition: A parent petitions the court to withdraw funds from the minor’s blocked account to pay tuition and fees at an in-state public university. The court reviews the tuition invoice, financial aid package, and argues that paying tuition now avoids detrimental debt and benefits the minor’s future earning capacity. If satisfied, the court may approve payment directly to the university.

Example B — medical treatment: A doctor recommends an expensive but necessary treatment not covered by insurance. The guardian files a petition attaching the treatment plan and invoices and asks the court to authorize payment from the minor’s settlement. If the judge finds the treatment is required and reasonable, the court can permit payment.

When other options may apply

• Structured settlements: If funds were paid via structured settlement, the terms may already permit designated payments for medical care or education; consult the annuity or settlement documents.
• Custodial accounts (UTMA/UGMA): If funds were placed in a custodial account under a transfer-to-minor statute, the custodian must use the money only for the child’s benefit until distribution age; but those accounts often allow payment for education or medical needs.
• Trusts: A court-approved trust can govern how and when funds are used and can give the trustee discretion to pay for education or health-related expenses before age 18 or 21, depending on the trust terms approved by the court.

Helpful hints

• Keep detailed records: invoices, receipts, medical records, and correspondence to support any petition for disbursement.
• File a clear, narrowly tailored petition: ask for specific payments (e.g., pay XYZ university $12,000 for spring semester tuition) rather than broad authority to spend unlimited funds.
• Expect court oversight: judges often require periodic accounting when a guardian or conservator manages settlement money.
• Consider alternatives: scholarships, grants, payment plans, or fundraising that reduce the need to spend the settlement principal.
• Understand public-benefits impact: spending settlement funds on the child may affect eligibility for Medicaid or other means-tested benefits; consult a benefits specialist before withdrawing funds used to supplement care covered by public programs.
• Communicate with providers: some schools or medical providers will invoice the court directly or accept payment plans to simplify court-ordered disbursements.
• Work with counsel experienced in minors’ settlements: an attorney familiar with New Mexico court practice can prepare the petition and supporting evidence and present the case to the judge.