Can a Parent Access a Minor’s Settlement Early for College or Medical Costs in Illinois? | Illinois Estate Planning

Disclaimer: This is general information and not legal advice. For advice specific to your situation, consult a qualified Illinois attorney.

Detailed Answer — How Illinois law treats access to a minor’s settlement before age 18

In Illinois, money paid to or for a minor because of an injury or other claim generally belongs to the minor. Parents or guardians cannot simply spend that money without following the legal steps required to protect the minor’s interests. Illinois law provides controlled ways to approve a settlement for a minor, protect the funds, and allow some access before the child turns 18 when courts find it appropriate.

Two key legal frameworks to know:

Judicial approval of minor’s settlements: A court normally must approve most settlements of claims by minors so a judge can determine whether the settlement is fair and how the funds should be handled. See the Illinois Code of Civil Procedure provisions on compromise of claims for minors (see 735 ILCS 5, Article II). A helpful gateway is the Illinois General Assembly page for the Code of Civil Procedure: 735 ILCS 5 (Code of Civil Procedure).
Guardianship/guardian of the estate: If a court appoints a guardian of the minor’s estate, that guardian manages the money for the minor’s benefit under the Probate Act rules. See the Illinois Probate Act for guardianship authority: 755 ILCS 5 (Probate Act).

How access before age 18 commonly works in practice:

Court-approved distribution within the settlement: When a minor’s claim settles, the settlement paperwork presented to the court can specify that certain amounts be paid now for specific needs such as current medical bills, ongoing medical treatment, or college tuition. The judge can approve immediate disbursements for those purposes while protecting the remaining funds for the minor’s future.
Blocked or restricted bank accounts: A judge may order the settlement funds to be placed in a blocked (restricted) account requiring court permission for withdrawal. This allows limited access only as the court permits for things like medical care or education expenses.
Structured settlements or annuities: Money can be converted to a structured settlement that pays the minor (or parent/guardian on the minor’s behalf) at set times to cover future needs such as college. These arrangements provide predictability and protect the principal until the minor reaches adulthood.
Guardianship of the estate: If a guardian of the estate is appointed under the Probate Act, the guardian may pay for the minor’s health, education, maintenance, and support in accordance with court orders and fiduciary duties. The guardian must account to the court and act in the minor’s best interest.
Custodial accounts, trusts, and other vehicles: Settlement funds can be placed in a trust, custodial account, or other legally approved vehicle (for example, a 529 college savings plan funded by settlement proceeds, if the settlement order permits and liens/claims are resolved). Each option has different tax, control, and withdrawal rules.

Common practical considerations courts review when approving early access:

Whether current medical treatment is necessary and whether funds should be released now to pay those providers.
Whether the disbursement is truly in the minor’s best interest (education, health, support).
Existing liens: medical providers, health insurers, or public benefits (Medicaid) may have claims that must be satisfied.
Attorney fees and litigation costs — courts commonly review and approve the fees paid from the settlement.
How the remainder of the money will be protected until the minor reaches majority.

Typical steps to request access to settlement money for college or medical expenses

Talk to an attorney experienced in minor’s settlements in Illinois. They prepare the required petition and settlement papers and identify known liens.
File a petition with the appropriate Illinois court asking the judge to approve the settlement and to authorize specific distributions for medical or educational needs.
Provide documentation: medical bills, school costs/estimates, proposed use of funds, and a proposed plan for protecting the remaining money (blocked account, trust, structured settlement, etc.).
Attend the court hearing. The judge will evaluate whether the requests serve the minor’s best interest and may approve, modify, or deny the proposed distributions or protections.
If approved, follow the court’s order exactly. Funds held in blocked accounts or trusts require court or plan-approved procedures for withdrawal.

Example (hypothetical)

Suppose a 16-year-old in Illinois receives a $100,000 settlement for injuries. The parents ask the court to: (1) pay $10,000 now to cover ongoing medical treatment; (2) pay the attorney $20,000 in approved fees; and (3) place the remaining $70,000 into a blocked account or trust for college and future needs. The court will review medical records, fee reasonableness, and the proposed protection plan. If the judge finds the plan fair and in the minor’s best interest, the court will issue an order instructing how funds are distributed and protected.

Helpful Hints

Start early: courts may need time to review petitions and liens before funds become available for college payments.
Document everything: supply clear medical invoices, school cost estimates, and a written plan for the remaining funds.
Resolve liens first: unresolved medical or government liens can delay or reduce available funds.
Consider structured settlements: they can guarantee future payments for college while protecting principal.
Talk to the financial institution in advance: banks and trustees will want court orders or trust documents before accepting or releasing settlement funds.
Keep tax and financial consequences in mind: personal injury damages for physical injury are often not taxable, but other parts of a settlement might have tax consequences; a tax advisor can help.
If the minor is disabled, other options (like an ABLE account or special needs trust) may preserve eligibility for public benefits—ask an attorney who handles disability planning.
Use the Illinois statutes and court rules as a guide: see the Illinois Code of Civil Procedure (735 ILCS 5) regarding compromise of claims and the Illinois Probate Act (755 ILCS 5) regarding guardianship and guardians of the estate for more detail: 735 ILCS 5 (Code of Civil Procedure) and 755 ILCS 5 (Probate Act).

If you have a settlement offer or already received funds, contact an Illinois attorney experienced with minor settlements or guardianship. They can explain court procedures, prepare petitions, identify likely liens, and propose a plan to let you use funds for college or medical care while protecting the child’s long-term interests.