Quick summary

If you have settlement funds for a minor in New Mexico and want those funds paid as an annuity (regular payments over time), you generally must:

• Obtain authority to manage the child’s money (court-approved minor-compromise or a guardian/conservator of the estate);
• Include the annuity or structured-payment plan in the settlement or ask the court to approve buying an annuity with settlement proceeds; and
• Work with a licensed annuity issuer or structured-settlement professional to set payment timing and amounts that the court will accept as in the child’s best interest.

Detailed answer — steps and legal framework under New Mexico law

How New Mexico treats settlements for minors

New Mexico requires extra protection when a minor receives a legal settlement or judgment. Courts routinely review and approve compromises for minors to ensure the settlement and the plan for handling funds are in the child’s best interest. The New Mexico Courts’ self-help pages on guardianship and related procedures describe practical steps for guardians and interested persons; see the New Mexico Courts self-help portal for guardianship and estate matters: https://www.nmcourts.gov/self-help/guardianship/.

Common legal paths to set up an annuity for a child

1. Court-approved minor-compromise (settlement approval):

   If a lawsuit resolves in a lump-sum payment for a minor, the parties typically file a petition asking the court to approve the settlement. In that petition you specify how the money will be handled. Courts commonly approve a proposed plan that buys an annuity (or funds a court-supervised account) if the plan protects the child’s long-term interests.

2. Guardian of the estate / conservatorship:

   If a guardian or conservator is already appointed for the child’s financial matters, that guardian petitions the court to invest settlement funds in an annuity or other suitable vehicle. The guardian must show the proposed annuity fits the child’s needs and complies with any statutory fiduciary duties under New Mexico law.

3. Custodial account under a transfers-to-minors law:

   If the amount and circumstances allow, funds can be placed in a custodial account (under New Mexico’s transfers-to-minors rules). Custodial accounts give a custodian limited authority to manage money until the minor reaches the statutory age. A custodial path may not replace a court-ordered settlement approval when litigation is settled; courts often prefer explicit approval when large sums are involved.

4. Structured settlement (annuity purchased from an insurer):

   Parties can agree that the defendant (or insurer) will buy an annuity from a licensed life insurer to provide periodic payments to the child. The settlement documents should reflect that the annuity purchase is part of the compromise and ask the court to approve the arrangement. Where applicable, parties may use a qualified assignment to transfer payment obligations to an annuity issuer.

Hypothetical example

Example: A 10-year-old receives a $300,000 settlement after a car-accident claim. The parent and opposing party agree the child should receive $1,500 per month until age 18, then $2,500 annually for life. To implement this, the plaintiff files a petition for court approval asking the court to (1) approve the settlement, (2) allow purchase of a life-insurance annuity that will make the scheduled payments, and (3) direct the insurer to pay the child or the guardian as the court orders. The court reviews the plan and approves it as in the child’s best interest. The insurer issues the annuity and begins periodic payments per the contract and court order.

What the court will consider

New Mexico courts look at whether the settlement and payment plan: (1) fairly compensate the child, (2) protect future needs, (3) avoid waste or mismanagement, and (4) are appropriate given the child’s age, health, and special needs. The court may require a hearing, an accounting from the guardian, or a trust/guardian structure rather than unrestricted access to funds.

Practical steps to set up the annuity

1. Talk to an attorney experienced in minors’ settlements. They prepare the petition and proposed order and suggest whether a structured settlement, guardian-managed annuity, trust, or custodial account best suits the child.
2. Choose the annuity type and vendor. Work with a reputable life insurer or structured-settlement broker licensed in New Mexico. Decide immediate versus deferred payments, payment period, survivor provisions, and whether payments increase over time (COLA).
3. Draft settlement documents that specify annuity funding. The settlement agreement should state how and when the annuity will be purchased and confirm any court approval required.
4. File the petition for court approval. Submit the settlement, the proposed order, annuity contract or vendor terms, and supporting exhibits. The court may schedule a hearing to protect the child’s interests.
5. Receive court order and implement the annuity purchase. After approval, the defendant or insurer purchases the annuity, naming the child or the child’s guardian/trust as payee per the court order.
6. Maintain court oversight if required. Guardians often must file periodic accountings and requests for court permission before changing investments or redirecting funds.

When a trust or special-need arrangement is better

If the child receives public benefits (Medicaid, SSI) or has long-term disability needs, an annuity plus an appropriate trust (for example, a special needs trust) may preserve benefits while providing for the child. Courts will consider benefit impacts when approving the settlement plan.

Where to find New Mexico law and court forms

For procedural rules and forms that apply in New Mexico courts, start with the New Mexico Courts self-help pages and the New Mexico Legislature’s statutes site to search specific statutes and probate rules:

• New Mexico Courts – Self-help and guardianship resources: https://www.nmcourts.gov/self-help/guardianship/
• New Mexico Legislature — Statutes lookup and chapters: https://www.nmlegis.gov/Legislation/Statutes

These pages will point you to the relevant probate and guardianship statutes and local court rules that govern minor-compromise procedures in New Mexico.

Helpful hints

• Start early: Court approval and insurer underwriting take time. Plan around hearing schedules.
• Document everything: Keep copies of settlements, petitions, annuity contracts, and court orders.
• Compare annuity offers: Different insurers offer different riders (cost-of-living increases, death benefits). Ask about fees and guarantees.
• Consider tax and benefit consequences: Annuity payments and trusts can affect taxes and public benefits. Ask a qualified advisor or attorney.
• Use court-approved forms when available: Courts often publish sample orders or petition templates for minor-compromise matters.
• If the child has a disability, consider a special-needs trust to avoid loss of public benefits while providing extra care.
• Choose flexible provisions: If possible, include court-review provisions so payments can be adjusted later if the child’s circumstances change.
• Get professional help: A lawyer who handles minor-compromises and a licensed structured-settlement broker can simplify the process and present the court with standard documentation judges accept.