Blocked Accounts, Annuities and Trusts for a Child's Settlement in California

By the FigureMyTax Editorial Team · How we calculate

California courts can order a child's money into a restricted insured account or annuity, a trust, a Uniform Transfers to Minors Act custodian account, a guardian of the estate or the county treasurer, and the court keeps jurisdiction until the child turns 18.

The court's menu

When there is no guardian of the estate, Probate Code 3611 directs the court, on application of the child's counsel, to order one or more of: (a) appointment of a guardian of the estate; (b) deposit in an insured account in a California financial institution, or a single-premium deferred annuity, subject to withdrawal only on court authorization; (c) after a hearing, payment to a special needs trust; (d) if the balance is $20,000 or less, holding on other conditions the court finds in the child's best interest; (e) if the balance is $5,000 or less, payment to a parent without bond; (f) transfer to a custodian under the California Uniform Transfers to Minors Act; (g) payment to a trust created or approved in the order, revocable by the child at 18; or (h) deposit with the county treasurer, if authorized locally.

A blocked (restricted) account

Option (b) is what lawyers call a blocked account: an insured account that cannot be touched without a court order. It is simple and protects the money, but a plain account earns whatever the bank pays. Where a guardianship already exists, Probate Code 3602 lets the court, for good cause, order money to go to a restricted account, annuity, custodian or trust instead of becoming part of the guardianship estate.

An annuity or structured settlement

A single-premium deferred annuity is one of the options in section 3611(b), and a petition may ask the court to approve a structured settlement with payments to the child that begin or continue as the court allows. The trade-off is predictability and protection against spending everything at once, against less flexibility if needs change. If the court orders the money deposited in an annuity, the release is not effective until the deposit is made.

A trust or a UTMA custodian

A trust must be created or approved in the court's order and be revocable by the child at 18, with terms the court finds necessary. A custodian under the Uniform Transfers to Minors Act holds the property for the child under that act. Ask the court what each arrangement lets the custodian or trustee do and when the child takes control.

Court oversight until 18

The court keeps continuing jurisdiction over the money paid, delivered, deposited or invested until the child reaches 18, unless it orders otherwise (Probate Code 3612). A trust for a person with certain disabilities can continue under court jurisdiction after 18.

Before you choose

Read why a judge approves the settlement and how the fee is set, then see how much is left in the California minor's settlement calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how California's rules apply to your specific case with a licensed California attorney.