Detailed answer — how Texas handles minor settlement funds

This answer explains, in plain language, what usually happens when a child (a minor) receives settlement money in Texas and whether anyone can use those funds for college or medical costs before the child turns 18. This is educational information only and not legal advice.

When a minor in Texas receives a settlement (for example, for a personal injury, medical claim, or other claim), the court normally must review and approve the settlement or the way the money will be held and managed. That review protects the child’s financial interests because minors cannot generally make binding contracts or manage large sums of money on their own.

Common ways the court and parties handle settlement proceeds for a minor include:

• Court-approved distribution: A judge can approve that some or all of the money be paid directly to the minor or to a responsible adult for specific uses (for example, paying existing medical bills or liens). Courts frequently authorize payment of medical providers, medical liens, or litigation-related expenses directly from settlement proceeds without giving the parent possession of the remainder.
• Guardian or conservator of the estate: The court may appoint a guardian (sometimes called a conservator or guardian of the estate) to manage the minor’s money. This person must follow the court’s orders and report to the court. The guardian can ask the court to release funds from the estate for the child’s education or medical needs if the judge finds that use is in the child’s best interest.
• Blocked accounts or court-ordered trusts: Courts often direct that settlement proceeds be placed in a blocked bank account or a trust. A blocked account typically requires court permission to withdraw funds. A trust (including a special-needs trust if the child is disabled) can be structured so trustees may pay for education, medical care, and other permitted expenses before the child turns 18 or even after, depending on the trust terms and court approval.
• Structured settlements: Instead of a lump sum, part of a settlement can be converted into periodic payments (a structured settlement) so funds become available over time for education or medical expenses.
• Custodial accounts under Texas’s UTMA/TUTMA rules: For smaller settlements, funds might be placed into a custodial account (under the Texas version of the Uniform Transfers to Minors Act). A custodian manages the account until the child reaches the statutory age for transfer (check state law for the exact age and rules). The custodian must use funds for the child’s benefit and follow statutory limits on what may be done without court involvement.

Key practical points for parents or guardians who want access to a minor’s settlement money before age 18:

• A parent’s ordinary authority to make medical or education decisions for a child does not automatically let the parent spend the child’s settlement money. Managing the child’s property is a separate legal power.
• To use settlement funds for college or future medical care, you usually must get the court to approve distributions or to set up a trust that allows those payments. The court will consider whether the proposed use benefits the child.
• If the child receives public benefits (Medicaid or SSI), unstructured access to settlement funds can jeopardize eligibility. In that situation, the court and attorneys often recommend setting up a properly drafted special needs trust or other protective vehicle to preserve benefits while paying for care.
• Medical providers and liens often get paid directly from settlement proceeds before the remaining funds are placed in an account for the child. Ask the attorney handling the settlement how medical bills and liens will be handled.

Relevant Texas resources and statutes (where to look):

• Texas statutes and code (general access to Texas code and guardianship law): https://statutes.capitol.texas.gov/
• Texas Judicial Branch – Self‑help: Guardianship information (how courts handle guardianship and protected estates): https://www.txcourts.gov/programs-services/self-help/guardianship/
• TexasLawHelp — practical guidance on settlements involving minors (consumer-oriented explanations and next steps): https://texaslawhelp.org/article/settlements-involving-minors

Typical court process to get money for college or medical expenses

1. Hire a lawyer experienced with minor settlements. An attorney will prepare the settlement documents and a petition (or motion) asking the court to approve the settlement and the proposed handling of funds.
2. File the petition with the appropriate court (often a county or probate court). The court will review the proposed settlement, ensure fees and liens are paid or accounted for, and decide how the remaining money should be handled to protect the child.
3. The court may approve a partial distribution to pay medical bills or school costs, order the remainder into a blocked account, appoint a guardian/conservator for the estate, or create a trust that permits specific future distributions for education or medical needs.
4. If you need ongoing access for college tuition or ongoing medical care, ask the court to either (1) allow scheduled distributions, (2) set up a trust with instructions to pay tuition/medical care, or (3) approve a structured settlement or custodial arrangement that meets those needs.

Bottom line: In Texas, you usually cannot freely spend a minor’s settlement money just because you are the parent. The safest and common path is court involvement — either through court approval of specific early distributions, appointment of a conservator/guardian of the estate, establishment of a trust, or use of custodial accounts or structured settlements. Courts will authorize use of funds for medical or educational needs when those uses clearly benefit the child and when the process protects the child’s long‑term interests.

Helpful Hints — practical steps and tips

• Talk to a Texas attorney who handles minors’ settlements as soon as possible. They will explain your options and file the necessary court papers. If money is small, some attorneys offer limited-scope help.
• Gather documentation: medical bills, school cost estimates, tuition invoices, treatment plans, and any evidence of ongoing or future medical needs. Courts expect proof when deciding whether to allow early distributions.
• If the child receives public benefits, ask about special needs trusts or ABLE accounts (if eligible) before accepting a lump sum. Doing the wrong thing can cause loss of benefits.
• Consider structured settlements or trust arrangements when large sums are involved. These tools can protect assets while ensuring funds are available for education and care.
• Expect the court to require oversight: accountings, receipts, and periodic reports are common when a guardian or trustee manages a minor’s funds.
• If you and the other parent disagree about using the funds, the court will decide based on the child’s best interest. Get legal help early to present your proposal clearly to the judge.
• Ask your lawyer about tax consequences of settlement proceeds and of any recurring payments or interest earned on blocked accounts or trusts.

Next steps — how to proceed

If you need money now for medical care or college expenses for a child who has a settlement or claim:

1. Contact an attorney who handles settlements for minors in Texas.
2. Provide documentation of the expense and any existing settlement paperwork.
3. Ask the attorney to file a motion asking the court to approve immediate payment, set up a trust that allows the payments, or appoint a conservator of the estate who can make the payments under court supervision.

Disclaimer: This article explains general Texas procedures but is not legal advice. Laws and procedures change, and every case is different. For advice tailored to your situation, consult a licensed Texas attorney.