THE DEPOSIT OF YOUR INJURED CHILD’S SETTLEMENT FUNDS IN CALIFORNIA

Opening the Blocked Bank Account

As I stated in previous articles and blogs on this website, I go down with the court-appointed guardian ad litem to the banking institution that was filed in the court paperwork to assist in opening the blocked account for the injured minor child. This is important as I want to make sure that it is opened properly. Given the recent economy, a number of banks have cut down on bank staffing, and depending on the bank, some banks are no longer offering minor blocked accounts. Some banks have to call a legal department first in order to get approval; this means they usually have to fax the court order to the in house legal department to make sure the bank staff opens the account properly. Some banks have done away with minor blocked accounts entirely. (As of the date of this writing, San Diego Navy Federal Credit Union no longer opens minor blocked accounts.) I normally will fax over the court order to the bank prior to meeting the guardian ad litem at the bank just to make sure everything is in order before bringing in the settlement check for deposit. The minor child does not need to be present at the deposit of his or her settlement funds in a blocked bank account. I make sure the guardian ad litem brings his or her, as well as the minor child’s, proper identification, and Social Security number(s).

Different Avenues of Depositing Settlement Funds for an Injured Minor Child

Under California law, the injured child’s settlement funds can be, upon court approval,transferred in the following nine ways:

Deposited in an insured account in a financial institution located in the State of California, subject to withdrawal by California court order only

Used to purchase a single-premium deferred annuity,140 subject to withdrawal by California court order only

Transferred to a custodian for the benefit of the minor under the Uniform Transfers to Minors Act

Paid to an appointed guardian or conservator of the estate for the benefit of the ward or conservatee party

Deposited with the county treasurer under certain statutorily prescribed conditions, pursuant to the California Probate Code

Deposited into a “Special Needs Trust” for minor children with substantial handicaps, after payment of any statutory liens in favor of the State Department of Health Services (Medi-Cal), the State Department of Mental Health, the State Department of Development Services, and any California city or county

Held “on such other conditions as the court in its discretion determines to be in the best interest of the minor child, if the settlement is not in excess of $20,000

Paid to the custodial parent in trust until the minor reaches age eighteen, if the settlement is not in excess of $5,000

Transferred to a trust until the minor reaches age eighteen

Usually, the funds are either deposited in a California bank account, or deferred annuity, or both. The deferred annuity is usually chosen for larger settlement amounts. Remember, the court retains great power in controlling the minor child’s settlement. In rare cases, the court can order the funds held on other conditions that the court, in its discretion, determines to be in the best interest of the minor child.

As mentioned, for larger settlements, the court may order the settlement funds to be used in a purchase of a “single-premium deferred annuity.” This is an annuity purchased from an insurance company for a one-time lump-sum premium, with no initial charges or administrative fees, and allowing funds to be withdrawn after five years with no penalty. One advantage of this type of structure, or investment vehicle, is that payouts can be structured to track the minor’s needs for tuition and living expenses. If the minor child is living with his or her parents, it may be appropriate to defer payouts for living expenses until after he or she no longer lives with the parents.

The court may order the settlement proceeds to be placed in a “special needs trust” if the minor child has a “substantial handicap.” This handicap will more than likely involve special needs that cannot be met without setting up the trust, and the proceeds do not exceed the amount that appears “reasonably necessary” to meet the minor’s special needs. Proceeds from such a trust may be paid out for the minor child’s “necessities of life” expenses (such as food, clothing, shelter, and utilities) without affecting his or her eligibility to receive government benefits. Some California courts, depending on the county, require the terms of such a trust to be reviewed by their respective probate departments,145 and require that the proposed trustee post a bond as a condition of court approval.

More Legal Questions About San Diego California Child Injury Accident Cases?

Do you have more legal questions about San Diego California Child Injuries & Accident Cases?  Return to the California Child Injuries & Accidents Frequently Asked Legal Questions page. 
 

The Law Offices of Mark C. Blane, APC

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The San Diego Child Injury & Accident Attorney that offers FREE Child Abuse Legal Help Books  to anyone BEFORE they speak to a Lawyer, or a Claims Adjuster, and signs any Forms; Mr. Blane also WROTE the BOOK on child injuries in California and it is available for purchase at his San Diego Child Injury Online Store; also he represent clients across Southern California including the following areas: 

Alpine, Bonita, Camp Pendleton, Cardiff by the Sea, Carlsbad, Chula Vista, Coronado, Del Mar, Downtown San Diego, El Cajon, El Centro, Encinitas, Escondido, Imperial Beach, Julian, La Jolla, Lakeside, La Mesa, Lemon Grove, National City, Ocean Beach, Oceanside, Pacific Beach, Poway, Ramona, Rancho Bernardo,San Marcos, Santee, Rancho Bernardo, Ramona, San Diego, Solana Beach, Spring Valley, Pacific Beach, Ocean Beach, San Ysidro, Julian,Lakeside, Vista and all other areas in San Diego County. We also proudly serve the following Southern California areas of: Imperial,Riverside, Orange, Los Angeles, San Bernardino, Santa Barbara, San Luis Obispo, Ventura, and Kern Counties.