California Distribution Methods

How do the various options compare for settlement money in California?
Forms of CA Settlement Distributions
Form of Distribution
Minor $20,000 or Less
Minor $5,000 or Less with or w/o Estate Guardian
Minor with No Estate Guardian
Disabled Minor
Disabled Adult w/o Estate Conservator
Disabled Adult with Estate Conservator
Healthy Adult
Guardianship of the Estate
x
(appointment)
(appointment)
x
(appointment)


Conservatorship of the Estate




x
x

Structured Settlement
x
x

  • x
x
x
x
3611(g) Trust
x
x

x



Blocked Account
x
x
x
x
x
x

Uniform Transfer to Minors Act
x
x
x
x



“any condition to court determines”
x






Deposited with the County Treasurer
x

x




Special Needs Trust
x
x
x
x
x
x

Trust with parents

x
x




Factors Differentiating Distribution Methods
Option
Rate of Return
Court Approval for Withdrawal
Annual Court Accountings
Probate Court Approval
Structured Settlement
Fixed by Annuity Issuer
No
Yes
Yes
3611(g) Trust
Market
No
Yes
Yes
Uniform Transfer to Minors Act
Market or Savings Depend on Parent
No
No
Yes
Delivery to Parent (Estate $5,000 or Less)
Market or Savings Depending on Parent
No
No
Yes
Deposit with County Treasurer
County’s Rate of Return
Yes
No
Yes
Bank Deposit in Single-Premium Annuity
Fixed by Annuity Issuer
Yes
No
Yes
Special Needs Trust
Low
Yes
Option of Court
Yes
Appointment of Guardian of Estate
Market
No
Yes
Yes
Of the above, the structured settlement is the most expensive to set up, by far, and has a fixed low rate of return. The 4% set-up cost is paid by the life company to the broker directly and comes out the minor’s settlement. The rate of return is normally roughly equivalent to the yield on 10-year Treasury at the time of settlement, and the rate of return does not change over time. A rider to the settlement can be purchased with an index for a limited amount of inflation protection. The 3611(g) trust has the best rate of return (a market rate) and a low cost to establish. It requires a bondable parent or trusted adult to act as trustee. Because of the low cost, high yield and inflation protection, we often recommend a 3511(g) trust.
If you would like our advice about the best options for your client, call us at 310-415-3344 or email us at dhiggins@settlementlaw.com.