Minor Settlements and Guardianship

by Neil B. Nicholson on Dec. 22, 2021

Accident & Injury 

Summary: This article addresses the process to obtain the required court approval of a minor settlement in excess of $10,000 in the State of New Hampshire.

Minor Settlements and Guardianship

            I combine the issue of guardianship and minor settlements because of their interrelationship. As a practical matter, guardianship over an estate of an incapacitated adult will be treated similarly by the probate court when it comes to oversight and management of the estate. The guardian over the ward possesses fiduciary duties to the ward, including the duty to pursue a personal injury action when warranted.

            You must consider the necessity of court approval every time you are involved in an action involving a minor. The Superior Court or District Court must approve any settlement involving a minor when the net settlement amount[i] received by the minor before the age of eighteen exceeds $10,000.[ii] Several questions arise with this requirement including why is it necessary, how is it done, and how does the probate court fit in. Key statutes involved in this process include RSA 463:19-b and RSA 464-A:42 and key rules are Superior Court Rule 40, Probate Court Rule 111, Circuit Court District Rule 3.24 and Federal Court Rules of Civil Procedure, Local Rule 17.1.

            Recognizing the need to protect children from their parents the legislature enacted restrictions on minor settlements over eighty years ago. The statute requires court supervision, court oversight and court approval of a minor settlement in recoveries exceeding $10,000 net to the minor. The superior court and probate court collaborate in this area to protect the best interests of the child.

            Mechanics Between Superior Court Rule 40 and Probate Court Rule 111

            Superior Court Rule 40[iii] provides an exhaustive step by step process on how to obtain approval for a minor’s settlement in court.[iv] The probate court and superior court form a relationship here for the child’s benefit. Several references about the probate court in Superior Court Rule 40 require further exploration.

            The client will not get any money unless and until you have “proof in the form of a certified statement from the Circuit Court-Probate Division that the guardian ad litem, parent, next friend, or other person who receives money on behalf of the minor whether through settlement, judgment, decree or other order, has been appointed guardian of the estate of such minor and is subject to the duties prescribed under RSA 463:19.”[v] The Probate Court must approve appointment of a guardian over the child’s estate before monetary distributions occur. This is true for structured settlements too. “If the amount to be paid to the minor before the age of majority in such structured settlement exceeds $10,000.00, then a guardian of the estate of such minor is required.”[vi]

When approved, the Superior Court will issue an Order. The Order will identify the medical bills and expenses approved, amount approved for counsel fees and identify with particularity the identity of the guardian over the estate of the minor and the amount of money he or she will receive on the minor’s behalf. “The balance amounting to $_____________, shall be paid over to __________________, as guardian over the estate of the minor.”[vii] The superior court cannot complete this Order until the probate court takes action and approves the guardian over the estate of the minor.

Once the funds are paid over to the guardian of the estate, the superior court ends the relationship with the probate court. It’s respectful though. They don’t want to end the relationship without structuring who will have parental responsibility over the minor child’s assets. In this case, the superior court and probate court mutually agree that the probate court will exclusively serve that function: 

Said funds shall, upon payment, be under the jurisdiction of the appropriate Circuit Court-Probate Division and shall be administered in accordance with the requirements of the Circuit Court-Probate Division. Any requests for withdrawal shall be addressed to the Circuit Court-Probate Division for its consideration.[viii]

Upon separation, the superior court sends a parting shot to the matchmaker, to forever hold your peace:

Counsel for the minor shall be responsible for the settlement funds until said funds shall have actually been deposited in the appropriate guardianship account pursuant to the terms of this order and pursuant to the terms of the guardianship.[ix]

Now let’s examine the role the superior court plays according to the probate court. Start with filing a Petition for guardian over the estate in probate court.[x] Probate Court Rule 111 reveals a little messier of a relationship between the probate court and superior court than we thought existed under Superior Court Rule 40.

A common question asked in seeking guardianship over the estate of a minor for purposes of completing a minor settlement involves the timing of opening guardianship. Rule 111 states that you can file the petition for guardianship any time after you’ve filed suit and before settlement is approved in the District Court or Superior Court.[xi] As a practical matter, you have to first file the Petition in Superior Court seeking approval of the settlement because Probate Court Rule 111 requires you to attach a copy of that very Petition you filed in the superior court. This makes perfect sense because the probate court needs to know to what financial extent it needs to protect the minor, through a bond, if the guardian over the estate ignores or violates their duties.

This timing sometimes proves tricky, like when you have the potential for multiple settlements with multiple defendants. For the one-party defendant situation, the correct procedure that blends and complies with the two rules (Superior Court Rule 40 and Probate Court Rule 111) is to file the Petition for Approval of Minor Settlement in superior court first. Right on its heels, file the Petition for guardian in the Probate Court, attaching a copy of the Petition you’ve filed in superior court.

Now, keep in mind that the superior court will not grant your Petition to approve the minor’s settlement until it has the probate court’s certificate of appointment of guardianship. Alert the superior court that you know this. Tell the superior court in your pleading seeking approval of the minor’s settlement that you have filed that same day a Petition for guardian, and that you will supply the superior court with the certificate of appointment from the probate court once the probate court renders a decision on guardianship.

After you file the Petition for guardian, the probate court decides the issue of bonding. The probate court will not issue a certificate of appointment for guardian until it receives a bond, or waives the requirement of a bond on the record. “In establishing the form and sufficiency of bond, the Probate Court shall consider the nature and amount of the asset(s), its (their) form of investment, the guardian's experience and reputation in managing property of the same or similar type as that of the guardianship, the attendant risks or volatility of the form of investment(s), any restrictions or limitations imposed upon the guardian by the Court in mitigation of waste, misfeasance or malfeasance and similar concerns related to the safety and security of the guardianship estate and its proper administration and management. After giving the consideration required, the Court, in its discretion, shall impose such bond requirements as attendant circumstances warrant.”[xii]

Sometimes you run into a situation where the parent or guardian cannot get a corporate security bond. Should the fiduciary mess up badly the bond company will make the insured (the minor’s estate) whole. The insurer then turns around and files a suit on the bond against the fiduciary to recover its loss. An experienced insurance broker is going to run a credit check on the person who is the object of the bond.[xiii] If the bond company does not believe that the fiduciary has assets to satisfy that potential judgment then it probably won’t issue the bond.            

A few choices exist when this happens. First, avoid the corporate security bond altogether by structuring the settlement with no funds (or less than $10,000) to be paid to the minor before the age of eighteen. Second, hire a professional guardian to serve as guardian over the estate. This second option causes what would otherwise be an avoidable expense to the minor’s estate. Third, find a bank that will hold the funds in a restricted account. I can’t think of any probate court judge that will allow the settlement funds to go into an unrestricted account.

A restricted account protects the minor’s funds. The guardian will need a court order for a withdrawal. Notably, some of the bigger banks might not approve of a restricted account because of the inherent risk that a teller misses the restriction, releases the funds to the parents, which then disappear overnight.[xiv] So if you strike out on a larger bank seek out one of the local banks. If you can’t get a bank to issue a restricted account then go back to the other two options – structured settlement or professional guardian.

If you think special circumstances exist to warrant the court waiving the requirement of a bond then state what they are and ask for a bond waiver. If a parent is expected to serve as guardian over the estate then expect the bond requirement. If the case involves a situation where the parent (or guardian over the estate) is never going to have direct or indirect access or control over the funds then a bond waiver may be appropriate for the guardian. This sometimes arises in the context of funding a Special Needs Trust where the money passes directly from the lawyer’s trust account to the trustee of the Special Needs Trust and never goes into the account of the guardian over the estate. In that scenario, however, the court will require a bond to approve appointment of the trustee of the Special Needs Trust. Probate Court Rule 111 contemplates your sometimes need for creativity.[xv]

            After the probate court issues a letter of appointment we’re ready to go back to the superior court. The probate court “shall issue a certification or provide other documentation which the guardian shall file with the Superior Court or District Court, as required under Superior or District Court rule, confirming that in setting the fiduciary bond of the guardianship, the settlement was considered.”[xvi]


What does a guardian need to do with the settlement funds?

The guardian needs to protect and preserve the settlement money for the benefit of the minor. Even with a bond, judges will almost always require the guardian to deposit settlement funds in a financial institution with a restricted account. The money is held in the account until the minor’s eighteenth birthday unless the guardian can convince the court otherwise. In this way, the funds are protected for the minor’s benefit.

The court is likely to take a narrow view on withdrawals. Approval of a withdrawal is unlikely if the expense is one that the parent would undertake regardless of settlement. If the need for the minor is directly tied to the settlement money the court may authorize invading that money prior to the eighteenth birthday. The guardian must convince the court that it is in the best interest of the child to allow the withdrawal.

Unless the probate court authorizes an alternative investment in writing, the guardian shall invest the funds within the confines of RSA 463.[xvii] Generally, this requires the guardian to do the following with the settlement funds:

  • to protect and preserve it, to retain, sell, and invest it as provided in RSA 463
  • to prosecute or defend actions, claims, or proceedings in any jurisdiction for the protection of the estate's asset
  • to account for it faithfully
  • to perform all other duties required by law, and at the termination of the guardianship to deliver the assets of the minor to the persons entitled to such assets
  • file an inventory of the estate of the minor
  • file with the court an annual account of administration and management of the guardianship estate, within 90 days after the anniversary date of the guardianship appointment unless otherwise ordered by the court with a copy to the minor once the minor reaches fourteen years of age[xviii]
  • comply with RSA 463:20

Here again, as a practical matter, the court “may limit or restrict the powers of the guardian of the estate or impose additional duties if it deems them desirable in the best interests of the minor or of the minor's estate” and it often will.[xix] Last, “[a]ll costs, expenses and fees related to the guardianship shall be paid from the guardianship estate assets subject to the approval of the Probate Court.”[xx]

            Structured Settlements for Minors

As well as their tax advantages for minors, structured settlements offer an opportunity to avoid the necessity of obtaining a guardianship appointment from the probate court. As you recall, if the minor’s net settlement is less than $10,000 no guardianship is required.[xxi] This creates three different scenarios where you need to assess whether or not you need to seek a guardianship in probate court, with an example below:

  1. A $100,000 Settlement. $100,000 structured in an annuity with no money to be paid to the minor before the age of eighteen.
    1. No guardianship necessary.
  2. $100,000 Settlement. Structured in an annuity with $10,000 net amount to be paid to the minor before the age of eighteen.
    1. No guardianship necessary.
  3. $100,000 Settlement. Structured in an annuity with $10,001 net amount to be paid to the minor before the age of eighteen.
    1. Guardianship necessary.[xxii] Remember, “[i]f the amount to be paid to the minor before the age of majority in such structured settlement exceeds $10,000, then a guardian of the estate of such minor is required.”[xxiii]

There are several additional considerations with structured settlements for minors:

  • make sure the insurance defendant company purchases the annuity directly to obtain the tax-free gain for the minor
  • if you fund the annuity instead of the defendant insurance company then any income gain will be a taxable event to the minor upon maturity
  • structured settlement companies will likely give you several proposals for free
  • bring in the structured settlement company early in the process even before settlement
  • parents can decide when the annuity matures – the parents may not want it to mature at age 18 because the income could impact the minor’s financial aid eligibility for college
  • make sure you comply with Superior Court Rule 40(k)


            Superior Court Rule 40(k) applies strict rules for structured settlements for minors. If you want or need to deviate from this plan for structured settlements you’ll need specific judicial findings on the record. I set out the whole rule here in the event you haven’t seen it since the adopted revisions in 2013:

(k)  In the event that the parties desire to enter into a structured settlement, which is defined as a settlement wherein payments are made on a periodic basis, the following rules shall also apply:

    (1)  Counsel for the defendants shall provide the court with an affidavit from an independent certified public accountant, or an equivalent professional, specifying the present value of the settlement and the method of calculation of that value.

    (2)  If the settlement is to be funded by an annuity, the annuity shall be provided by an annuity carrier meeting at least the following criteria:

        (A)  The annuity carrier must be licensed to write annuities in New Hampshire and, if affiliated with the liability carrier or the person or entity paying the settlement, must be separately capitalized, licensed and regulated and must have a separate financial rating;

        (B)  The annuity carrier must have a minimum of $100,000,000.00 of capital and surplus, exclusive of any mandatory security valuation reserve;

        (C)  The petition shall contain the following information about the annuity and the annuity carrier:

            (i)  a description of the structure of the annuity arrangement;

            (ii)  a description of the history and size of the annuity carrier and its experience in issuing annuities;

            (iii)  a certificate from the New Hampshire Insurance Department stating that the annuity carrier is in good standing in New Hampshire;

            (iv)  whether the annuity carrier is domiciled or licensed in a state accredited by the National Association of Insurance Commissioners under that organization’s Financial Regulation Standards program; and

            (v)  the annuity carrier’s most recent ratings from at least two of the commercial rating services listed in subparagraph (D);

        (D)  The annuity carrier must have one of the following ratings from at least two of the following rating organizations:

            (i)  A.M. Best Company: A++, A+, A, or A-;

            (ii)  Moody’s Insurance Financial Strength Rating: Aaa or Aa;

            (iii)  Standard & Poor’s Corporation Insurer Claims-Paying Ability Rating: AAA, AA+, AA, or AA-;

            (iv)  Duff & Phelps Credit Rating Company Insurance Company Claims Paying Ability Rating: AAA, AA+, AA, or AA-;

        (E)  The annuity carrier must meet any other requirement the court considers reasonably necessary to assure that funding to satisfy periodic payment settlements will be provided and maintained;

        (F)  The annuity carrier issuing an annuity contract pursuant to a qualified funding plan under these rules may not enter into an assumption reinsurance agreement for the annuity contract without the prior approval of the court and the owner of the annuity contract and the claimant having the beneficial interest in the annuity contract. The court shall not approve assumption reinsurance unless the reinsurer is also qualified under these rules;

        (G)  The annuity carrier and the broker procuring the policy shall each furnish the court with an affidavit certifying that the carrier meets the criteria set forth in subsection (D) above as of the date of the settlement and that the qualification is not likely to change in the immediate future. The broker’s affidavit shall also contain the following certification: “This determination was made with due diligence by the undersigned based on rating information which was available or should have been available to an insurance broker in the structured settlement trade”;

        (H)  In the event that the parties to the action desire to place the annuity with an annuity carrier licensed in New Hampshire which does not meet the above criteria, the court may consider approving the same, but only if the annuity obligation is bonded by an independent insurance or bonding company, licensed in New Hampshire, in the full amount of the annuity obligation; and

        (I)  The court reserves the right to require other reasonable security in any structured settlement if the circumstances should so require.

    (3)  The court may, for good cause shown, approve a structured settlement that does not comply with the provisions of paragraph (k). If the Court approves a settlement that does not comply with the provisions of paragraph (k), the court shall make specific findings on the record explaining the reason(s) for approving the settlement.


[i] Net amount means the amount of the settlement after deduction for attorneys’ fees, court costs, reimbursement for advanced expenses pursuing the action, payment of liens (see Super. Ct. R. 40(c)), and other expenses related to the claim. See RSA 463:2.

[ii] RSA 464-A:42.

[iii] https://www.courts.state.nh.us/rules/supercr-new/supercr-new-40.htm

[iv] District Court Rule 3.24 mirrors Superior Court Rule 40. I focus on the Superior Court rule because that is where many minor settlements resolve. See also Federal Court Rules of Civil Procedure, Local Rule 17.1.

[v] Superior Court Rule 40(c).

[vi] Id.

[vii] Superior Court Rule 40(j)(2).

[viii] Id.

[ix] Id.

[x] See generally, RSA 463.

[xi] Probate Court Rule 111.

[xii] Id.

[xiii] See, e.g., http://www.nhins.com/bonds/

[xiv] Big thanks to Rory Parnell, Esq. spitballing restricted account issues with me.

[xv] “To minimize the expense of bond requirements, the Probate Court may, in its discretion, restrict, restrain or enjoin the guardian from expending, withdrawing, encumbering or otherwise disposing of the settlement proceeds without prior written approval of the Probate Court or upon such other limitations or conditions as it may impose.”

[xvi] Id.

[xvii] Probate Court Rule references RSA 463:23-a. No such statute currently exists.

[xviii] See RSA 463:19

[xix] RSA 463:19, VI.

[xx] Probate Court Rule 111.

[xxi] RSA 464-A:42; Superior Court Rule 40(b).

[xxii] Id.

[xxiii] Superior Court Rule 40(c).

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