Short answer (FAQ style)

If you have settlement funds that will be held for a child in Utah, you can often arrange for those funds to purchase a structured settlement annuity or to be managed through a court-approved conservatorship/trust. Because minors generally cannot manage their own settlements, Utah courts typically must approve the plan that protects the child’s funds. The usual options are (1) a court-approved structured annuity purchased from a life/annuity company, (2) a custodial account or UTMA arrangement, or (3) a trust or conservatorship (including special needs trust if the child is disabled). Each option has different costs, flexibility, and legal steps.

Detailed answer: Steps to set up an annuity for a child’s settlement under Utah law

1. Confirm legal status and whether court approval is required

In Utah, money paid to or on behalf of a minor as the result of a claim or lawsuit usually requires court review and approval before the funds can be released or spent. If the settlement arises from litigation or a claim involving a minor, the court will want to ensure the child’s best interests are protected before allowing access to the funds or letting someone buy an annuity on the child’s behalf. Utah’s courts provide information about guardianship and conservatorship procedures and how the court protects minor’s funds: Utah Courts – Guardianship & Conservatorship. You or your attorney will typically need to file a petition asking the court to approve the settlement and the proposed disposition (for example, purchasing an annuity).

2. Decide which legal vehicle fits the child’s needs

Common options:

• Structured settlement annuity: The settlement funds are used to purchase an annuity contract from a life insurance/annuity company that will pay the child periodic payments (immediate or deferred) for a set period or for life.
• Conservatorship or guardianship account: A court-appointed conservator or guardian manages the funds until the child reaches the age set by the court (often 18 or older). The conservator must account to the court.
• Trust (minor’s trust, irrevocable/trust with withdrawal provisions): A trust can specify how and when money is paid, offer protection from creditors, and continue beyond the child’s majority. Special needs trusts are available if the child receives public benefits.
• Custodial account under UTMA/UGMA: Utah has custodial transfer laws allowing an adult to hold property for a minor; the child receives full control at the age set by statute. (If you think UTMA might apply, check Utah’s statutes and consult counsel to confirm the age and terms.)

3. Consider structured settlement specifics

If you choose a structured settlement annuity, important elements include:

• Immediate vs. deferred payments — receive payments now or begin later.
• Life-contingent vs. guaranteed-period payments — whether payments stop at death or continue for a guaranteed period.
• Cost and fees — annuity purchase price, insurer transaction fees, broker/placement fees.
• Carrier strength — choose a financially stable, well-rated annuity issuer.
• Inflation protection — consider COLA or cost-of-living adjustments if available.
• Tax consequences — structured settlement periodic payments from physical injury claims are often tax-free, but other settlement components can have tax consequences. See IRS guidance on annuities and settlement taxation for general information: IRS Topic No. 410: Annuities.

4. File the right petition and obtain court approval

Work with the plaintiff’s attorney (or the guardian/conservator) to prepare a petition for court approval of the settlement and of the proposed disposition of funds. The petition should include the full settlement terms, the proposed annuity contract (or trust terms), and an explanation of why the arrangement serves the child’s best interests. The court may schedule a hearing and require an accounting or an independent guardian ad litem for the child. Utah courts oversee these matters and provide local procedures; start with the court’s guardianship/conservatorship resources: Utah Courts – Resources.

5. Purchase the annuity or establish the trust after approval

Once the court approves, you may direct the settlement disbursement to the annuity issuer or to the trustee/conservator account per the court’s order. For a structured settlement annuity, the insurer typically issues a contract naming the payee (the child) and the payee’s representative (guardian/trustee) for administrative matters. If using a trust or conservatorship, the trustee or conservator manages the funds according to the court order or trust document.

6. Ongoing administration and reporting

Conservators and trustees owe fiduciary duties and may need to file periodic accountings with the court. Structured annuities generally pay directly to the payee or payee’s representative and do not require court-accounting for each disbursement, but the conservator/trustee must keep records and follow court orders. Check Utah’s probate and guardianship statutes and local rules for required reporting and accountings: Utah Code – Title 75 (Probate, Trusts, and Protective Proceedings).

7. Consider special circumstances

• Disabled child: If the child receives or may qualify for government benefits (Medicaid, SSI), consider a properly drafted supplemental needs (special needs) trust to avoid jeopardizing benefits.
• Desire for flexibility: Trusts offer more flexibility than most annuities (for education, housing, medical needs) but may have higher administration costs.
• Future modification: Some structured settlement annuities are irrevocable and cannot be cashed in without court approval; transfers of future payments may be regulated by federal and state law.

Helpful hints — practical checklist

• Hire or consult an attorney experienced in settlements for minors and structured settlements in Utah. They can prepare the court petition and explain local practice.
• Gather documentation: settlement agreement, medical records (if injury-based), evidence of damages, proposed annuity contract, insurer financial ratings.
• Compare annuity issuers — check independent rating agencies (A.M. Best, Moody’s, S&P) and ask for quotes and sample contracts.
• Watch for fees — placement brokers, administrative fees, and legal fees can reduce the money available to the child.
• Consider tax implications — speak with a tax advisor about settlement tax treatment for the specific claim components.
• If the child is disabled, explore a special needs trust so the settlement does not harm public benefit eligibility.
• Make sure the court order specifically authorizes the transaction, names the payee and payee representative, and states who will receive accounting duties.
• Keep good records of court orders, contracts, and payments; conservators and trustees must account for how funds are used.

Where to find Utah-specific rules and forms

Start with these official resources:

• Utah Courts — Guardianship & Conservatorship information: https://www.utcourts.gov/howto/guardianship/
• Utah Legislature — statutes on probate, trusts, guardianship, and protective proceedings (Title 75): https://le.utah.gov/xcode/Title75/
• IRS overview on annuities and taxation (general federal tax guidance): https://www.irs.gov/taxtopics/tc410

Common questions parents and guardians ask

Can I buy an annuity for my child without court approval?

Usually no. For settlements arising from claims or lawsuits involving a minor, Utah courts generally must review and approve the settlement or any plan to limit the child’s access to the money. Buying an annuity without court authorization risks legal challenges and possible reversal.

Will an annuity protect the child’s money?

Yes, a properly structured annuity can provide predictable, periodic income and protection from immediate depletion. But annuities can be inflexible and expensive to change. A trust may offer greater flexibility where needed.

Who manages the annuity until the child is an adult?

The annuity contract usually names the child as payee and a payee representative (guardian, trustee, or conservator) to receive or manage payments on the child’s behalf. The court may require the conservator or trustee to report to the court periodically.

Final steps and next actions

1. Talk with the attorney handling the settlement or hire one experienced with minor settlements and structured settlements in Utah.
2. Decide which vehicle (annuity, trust, conservatorship, UTMA) best fits the child’s long-term needs.
3. Prepare and file the court petition for settlement approval and proposed disposition.
4. After the court signs the order, complete the purchase or establishment of the annuity/trust as ordered.

Disclaimer

This article explains general principles and Utah resources. It is educational only and not legal advice. Laws and procedures change. For help specific to your situation, consult an attorney licensed in Utah who handles minor settlements, structured settlements, conservatorships, or trusts.