Detailed Answer

When a child in Virginia receives money from a legal settlement (for example, after a car accident or a medical malpractice claim), parents or guardians often want to use part of those funds for necessary items such as medical treatment or college costs before the child reaches adulthood. Under Virginia law, those settlement proceeds are treated differently than ordinary family income or savings. A parent or guardian cannot simply withdraw or spend the money without following legal procedures designed to protect the child’s financial interests.

How settlement funds for minors are usually handled

Virginia courts treat a minor’s settlement proceeds as the minor’s property. Because the funds belong to the child, the court generally requires formal approval before the money is disbursed, invested, or used. Typical outcomes include:

• Approval of the settlement by a Virginia circuit court, often after appointing a guardian ad litem to review the proposed settlement and protect the child’s interests.
• Entry of a court order directing how the proceeds will be handled — for example, placing the funds in a court-supervised (blocked) account, ordering payment to a guardian/trustee, or directing purchase of a structured settlement annuity.
• Creation of a trust or other fiduciary arrangement for the child’s benefit (for example, a trust that permits distributions for education or medical needs).

Can a parent get money early for college or medical bills?

Yes—sometimes. The usual path is to seek the court’s permission to use part of the settlement for specific, documented needs (like tuition, room and board, tuition deposits, or ongoing medical care). The court evaluates whether the requested use is in the child’s best interest before approving a partial disbursement. Factors the court will consider include:

• The purpose of the withdrawal (education, urgent medical care, ongoing medical needs, necessary living expenses tied to the injury, etc.).
• How much of the settlement remains for the child’s future needs.
• Whether the proposed distribution could be structured (for example, a one-time payment to a college or a limited payment for a particular medical provider) rather than handing cash to the parent.
• Any liens or subrogation claims from insurers or Medicaid that must be satisfied before net funds are disbursed.

Common legal mechanisms to allow early access

• Court-approved partial distribution: Petition the circuit court that approved (or will approve) the settlement asking for a limited release of funds for a particular purpose. The judge can order payment directly to a school, medical provider, or to a trustee who must account for spending.
• Trust: The court may allow the settlement to fund a trust (often with a trustee required to make distributions only for education, health, maintenance, or support). A trust can give the child long-term protection and delay full access until an age the parties or court set.
• Structured settlement annuity: Instead of a lump-sum payment at majority, funds can be converted to scheduled payments, sometimes with an initial lump sum for immediate needs. Transfers of structured settlement payments are regulated; court involvement is usually required when the recipient is a minor.
• Custodial arrangements or blocked accounts: The court may direct funds be deposited in a blocked bank account or the court registry with release only under court order or according to terms set by the court.

Practical steps to request early access

1. Gather documentation proving the child’s current needs (college admission letter and invoice, medical bills, ongoing treatment plans, receipts, and estimates).
2. Check how the settlement was structured or approved. If the settlement already required court approval, the same court usually handles petitions for partial disbursement.
3. Consider hiring an attorney experienced with minors’ compromises and trusts. An attorney can prepare the petition, draft a proposed order, and present the request to the court. Many courts expect counsel for the child and often a guardian ad litem to be involved.
4. File a written petition with the appropriate Virginia circuit court asking for a specified amount for a specified purpose, and include supporting documents and a proposed order explaining how the funds will be used and accounted for.
5. If the child receives public benefits (Medicaid or similar), notify the appropriate agency and address any lien or reimbursement obligations—courts often require satisfaction or reservation for medical liens before disbursing funds.
6. Attend the hearing. The judge will evaluate best interests and may approve, deny, or approve with conditions (e.g., pay school directly or set aside funds in trust).

Things to watch out for

• Tax and financial aid impact: Large distributions may affect financial aid eligibility and tax considerations. Consult a financial aid advisor or tax professional before large disbursements for college costs.
• Medicaid or insurer liens: If public benefits or insurers paid medical care, federal or state law may require repayment from any settlement proceeds. The court will typically require these liens be addressed before releasing funds.
• Documentation and accounting: Courts often require detailed accounting for how distributed funds are spent.

Where to look for Virginia rules and court information

General resources you can consult include the Code of Virginia and the Virginia court system websites for forms and local practice information:

• Code of Virginia: https://law.lis.virginia.gov/vacode/
• Virginia Judicial System (courts and self-help resources): https://www.vacourts.gov/

Because procedures and local practice can vary between counties and circuit courts, it is common for attorneys to file a petition in the circuit court where the child resides or where the underlying case was litigated.

Helpful Hints

• Do not spend or promise settlement money without court approval — even well-meaning parents can be held accountable if funds belong to the child.
• Collect clear proof: school bills, acceptance letters, itemized medical bills, and treatment plans help the court see the need for early access.
• Consider targeted payments: courts prefer direct payments to institutions or providers over handing cash to a parent.
• Ask the court about setting up a trust or supervised account so the child’s remaining funds are protected long-term.
• Talk with an attorney early. Many attorneys handle petitions for minor’s settlements and can often estimate the likelihood of approval and help plan around liens and tax/financial aid effects.
• If the child receives Medicaid or other public benefits, notify the appropriate agency before seeking distributions—the agency may assert a claim against the settlement.

Disclaimer: This article explains general legal principles under Virginia law and is for educational purposes only. It is not legal advice. Every case is different. For advice about a specific situation, consult a Virginia attorney experienced with minors’ settlements and trust or probate matters.