UTMA Accounts, Annuities and Structured Settlements for a Child in Delaware

By the FigureMyTax Editorial Team · How we calculate

Delaware's statute sends a child's net settlement to a UTMA account if the settlement is within the court rule's threshold, and to a court-approved annuity or structured instrument above it, with up to the threshold allowed in a UTMA account.

The statutory structure

12 Del. C. 3901(k)(1) says no guardian need be appointed for a minor if the settlement of a tort claim is at or below the rule's monetary threshold and the net settlement funds are deposited in a Uniform Transfers to Minors Act (UTMA) account for the minor, or if the gross settlement is above the threshold and the net funds are placed in a court-approved annuity or structured financial instrument for the minor, or no more than the threshold goes into a UTMA account with the balance in an annuity or structured instrument.

The $25,000 figure

The threshold is set by rule. In a Court of Chancery order, the court explains that a guardian need not be appointed for a minor who will receive $25,000 or less if the funds are placed in an annuity or structured instrument or deposited in a UTMA account, and that above $25,000 the court generally permits up to $25,000 in a UTMA account with the remainder in an annuity or structured instrument.

A UTMA account

A custodian holds the money for the minor, and personal property may also be titled in an adult's name followed by "As custodian for [name of minor] under the Delaware Uniform Transfers to Minors Act" (3901(l)). Ask the court what proof of deposit it requires after approval.

An annuity or structured settlement

The trade-off is predictability and protection against spending everything at once, against less flexibility if needs change. The same order notes that exceptions to the annuity requirement are allowed only when necessary and in the minor's best interests, and denied one where the petitioner had not shown that an appropriate annuity was unavailable.

Exceptions and public benefits

For good cause the court may appoint a guardian and transfer the matter to the Court of Chancery to protect the estate and maximize benefits available to the minor, including public benefits such as Social Security or health insurance (3901(k)(2)). A court-approved annuity should be checked against any means-tested benefits the child receives.

Before you choose

Read why a judge must approve the settlement and what we found about attorney fees, then see what is left in the Delaware minor's settlement calculator.

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