Georgia — Accessing a Child’s Settlement Funds Before Age 18: Can Parents Use Money for College or Medical Expenses?

Detailed Answer

Short answer: sometimes — but it depends on how the settlement funds were placed, any court orders that control the money, and the legal vehicle holding the funds. You cannot automatically treat a minor’s settlement as your personal money. In many Georgia cases, a court, a trustee, or a custodian must approve withdrawals and distributions for specific purposes such as medical care or education.

How Georgia law usually treats minor settlement money

When a minor in Georgia receives money from a personal-injury settlement, insurance claim, or other legal recovery, the money is often placed into one of these arrangements:

• Blocked or court-approved account (often ordered by a probate or juvenile court as part of settlement approval).
• A custodial account under a transfers-to-minors statute (custodial or UGMA/UTMA-style accounts).
• A guardianship/conservatorship account under Georgia guardianship rules if a guardian is appointed.
• A trust (for example, a special needs trust or a parental/trustee-controlled trust).
• A structured settlement (periodic payments under an annuity contract).

Which arrangement applies matters because each one carries different rules about who can use the money and for what purpose.

Important points that typically control access

• If a judge approved the settlement and ordered the money placed in a blocked or custodial account, that court order usually must be followed. To spend money that the court restricted, you likely must return to court and ask for permission.
• If the money is in a custodial account under state transfers-to-minors law (a custodian holds the funds for the child), the custodian may generally use the funds for the child’s benefit — which usually includes medical care and education — but the custodian must follow the statute and the account’s terms.
• If a guardian or conservator manages the funds under a court guardianship, the guardian must get court approval for major expenditures not covered by routine care. Courts closely supervise guardianships.
• If the funds were placed into a trust (such as a special needs trust or a parental trust), the trust document and Georgia trust law govern distributions. Trustees must follow the trust terms and fiduciary duties.
• Some arrangements (e.g., structured settlements) limit liquidity; you may need special court approval or a qualified assignment purchaser to modify streams of payments.

Common scenarios and how they play out

Here are practical examples to illustrate what typically happens in Georgia:

• Custodial (UTMA/UGMA) account: The custodian can generally pay for the child’s health care and education from the account. You should keep receipts and records and act only for the child’s benefit.
• Court-ordered blocked account: If a judge ordered the funds blocked until the child reaches majority (or until another court order), the parent or custodian must petition the court to release funds for college tuition or medical bills. The court may grant limited distributions for certain needs.
• Guardianship/conservatorship: Guardians must often file accountings and get court approval for large withdrawals. The court decides if college or medical expenses are appropriate.
• Trust or special needs trust: The trustee follows the trust terms. If the trust allows distributions for education or medical care, the trustee can make those distributions without a court hearing (so long as the trustee acts within its powers).
• Medicaid, Medicare, or liens: If the child received public benefits or the settlement resolved a claim that insurers or government programs have liens on, those liens must be resolved before distributions. That can reduce available funds and complicate access.

Steps to request access to settlement funds for college or medical expenses

1. Review the settlement documents and any court order. These documents usually describe how funds must be handled and whether court approval is required for withdrawals.
2. Identify the legal vehicle holding the funds (blocked account, custodial account, guardianship, trust, structured settlement, etc.).
3. If the money is in a custodial account and you are the named custodian, determine whether the proposed use (college or medical) is a permissible “benefit” under that custodial statute or account agreement. Keep records for accounting to the minor later.
4. If the funds are controlled by a court order, guardianship, or trust that limits access, file a motion or petition with the court asking for permission to release funds for the specified purpose. Explain the expense, provide invoices/estimates, and show that the withdrawal serves the child’s best interest.
5. Address any outstanding liens or claims (healthcare providers, Medicaid, insurers). You or your attorney may need to negotiate or obtain court approval to satisfy liens from the settlement funds.
6. Get a written court order or trustee authorization before using funds governed by a court or trust. Keep copies of all orders and receipts.

Who decides — and what judges typically consider

When you ask a Georgia court to release a minor’s settlement funds, judges tend to consider:

• Whether the requested use directly benefits the child (education and necessary medical care usually qualify).
• The amount requested relative to the total settlement (courts are cautious about large depletions).
• Whether alternatives exist (health insurance, scholarships, payment plans).
• Protection of long-term needs — especially if the settlement compensates for life-long injuries.

Practical timeline and costs

Pleading the court for a release or modification can take weeks to months. Expect filing fees, possible attorney fees, and the court’s calendar delays. If an attorney helped obtain the settlement, you may need counsel to pursue a distribution petition.

Where to look for official Georgia resources

For statutes, local rules, and forms, start with these official state resources:

• Georgia General Assembly: https://www.legis.ga.gov/ — use this site to search Georgia statutes and learn about state law.
• Georgia Judicial Branch / Georgia Courts: https://georgiacourts.gov/ — for court forms, local probate court contacts, and information about guardianships and trusts.

Helpful Hints

• Don’t spend or promise settlement money until you confirm who controls it and whether a court order restricts use.
• Read the settlement agreement and any judge’s order carefully — they often spell out approval and distribution procedures.
• If the funds are in a custodial account (UTMA/UGMA), document how you spend the money and keep invoices showing the expense benefitted the child.
• If the settlement resolved a medical lien or Medicaid claim, clear the lien first or show the court how the lien will be paid.
• Consider using tax-advantaged education vehicles (529 plans) if the account allows rollover and if doing so serves the child’s best interest.
• Keep a paper trail: court orders, trustee authorizations, receipts, and bank statements will make future accounting to a court or the child easier.
• When in doubt, speak with a Georgia attorney experienced in minor settlements, guardianship, or trusts; many lawyers offer a brief consult to explain options and likely outcomes.

Disclaimer: This article explains general principles and practical steps under Georgia procedures. It is not legal advice and does not create an attorney‑client relationship. Laws change and facts matter — consult a licensed Georgia attorney or the court that approved the settlement for advice tailored to your situation.