In North Carolina, a judge must approve any settlement for a minor and can authorize a structured settlement funded by an annuity if it is in the child’s best interest. If money is already with the clerk or a guardian of the estate, you can ask the court to approve a single protective transaction to purchase an annuity, or seek authority through the guardianship to spend principal for that purpose. Other tools—like restricted accounts or transfers under the Uniform Transfers to Minors Act—may be used depending on amount and timing.
North Carolina treats a child’s settlement money as protected property. A judge must approve the settlement terms and how the funds will be safeguarded for the child. At the time of settlement, the court can approve a structured settlement so the insurer funds payments through an annuity. If funds are already being held—for example, by the clerk of superior court or a court‑appointed guardian of the child’s estate—you can petition for a court order authorizing the purchase of an annuity as a one‑time protective transaction, or ask for authority in the guardianship to spend principal to buy the annuity.
Courts and clerks look for clear proof that the annuity and payout schedule serve the child’s best interests, that fees and commissions are reasonable, and that the plan respects rules about parental support (a child’s funds usually are not used for ordinary expenses parents must cover). For smaller amounts, alternatives like a restricted bank account or a transfer to a UTMA custodial account may be more practical.
Example: A 12‑year‑old receives $150,000 for an injury claim. The court could approve a structured settlement with guaranteed payments at ages 18, 21, and 25 funded by a life‑company annuity. If the case settled earlier and $150,000 now sits with a court‑appointed guardian, the guardian can petition for a single protective arrangement to purchase a comparable annuity.
Judicial approval of minor settlements. A judge must approve any final order affecting a minor’s rights. Courts typically approve a structured settlement if it protects the child and the terms are fair.
Best‑interest standard. The court or clerk will only authorize an annuity if it benefits the child after considering the payout schedule, financial strength of the issuer, fees, and alternatives.
Authority to buy an annuity. If funds are already held, you can seek a one‑time court‑approved protective transaction specifically authorizing an annuity purchase, or request guardianship authority to spend principal for that purpose.
Use of minors’ funds. A child’s funds generally should not pay routine parental obligations (like basic food, clothing, or school supplies). Courts may allow expenses that clearly exceed normal support or are medically necessary.
Holding funds with the clerk. Up to $50,000 per source can be deposited with the clerk without appointing a guardian; larger sums require a court order or a guardianship solution. Clerk‑held funds must be released to the child at 18 unless another lawful structure applies.
UTMA option. A transfer to a UTMA custodian can be authorized; for transfers over $10,000 by a personal representative or guardian, clerk authorization is required. UTMA property must be turned over to the child at 21.
Guardianship bond and restrictions. A guardian of the estate typically must post bond unless funds are placed in restricted accounts by court order (for example, with a bank under a receipt and agreement). Annual accountings are required.
At settlement: Your attorney files a motion/petition for minor settlement approval in Superior Court, attaching the proposed structured settlement terms and annuity details. The judge reviews and, if appropriate, approves the settlement and the annuity funding terms.
If funds are already held: File a petition with the clerk seeking a single protective arrangement authorizing an annuity purchase, or file a motion in the guardianship for authority to spend principal to buy the annuity. Include payout schedules, insurer ratings, fees, and why the plan is best for the child.
Guardianship route (if needed): Apply to be appointed guardian of the estate for the minor, post bond (or request restricted accounts to reduce/avoid bond), file the inventory, then seek court authority to purchase the annuity.
Implementation: After the order, complete annuity paperwork. Ensure the order states who owns the annuity, that payments are non‑assignable, and names contingent payees. File proof with the court.
Oversight: If a guardianship exists, file required accountings. If funds remain with the clerk, request disbursements only as authorized. UTMA accounts have minimal court oversight but must follow statutory rules.
Distribution: Clerk‑held or guardianship funds not structured typically release at 18; UTMA at 21. Structured settlement payments follow the approved schedule.
Court approval is not optional. Do not sign or fund any minor settlement annuity without a court order approving the terms.
Amounts matter. The clerk cannot take more than $50,000 per source without a court order; larger sums usually require a guardianship or specific court directives.
UTMA ends at 21. If you want control beyond age 21, a UTMA custodian account is not the right tool; consider a court‑approved structured settlement or trust solution.
Routine support. Expect the court to reject requests to use the child’s money for ordinary parental support unless there is a documented necessity.
Bond and fees. Guardians generally must post bond unless the court restricts access to the funds (e.g., restricted accounts) and will have ongoing reporting duties.
Limited flexibility later. Structured settlements and annuities are hard to change after approval. Choose payout timing and contingencies carefully up front.
Procedures can vary. Local practices and forms differ by county, and procedures can change. Build in time for hearings and obtain insurer documentation early.
If you’re resolving a minor injury claim and want to protect the funds with a court‑approved annuity or other structure, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-313-2737.
Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney–client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.
