Compensation for a child is usually subject to court approval, and the court may decide how the money is managed until adulthood or longer if the child lacks capacity. Arrangements vary by jurisdiction and circumstances, and a trust is not always required.
The role of court orders
Because children cannot legally agree to settle their own claims, Australian courts generally need to approve a settlement for a child. The court considers whether the settlement is in the child's interests and may make orders about where the money is held and how it can be spent.
The exact process differs between states and territories. A solicitor should explain what the local court requires, what evidence it expects about the child's future needs and what happens to the money after approval.
Trustee, manager and public body roles
Depending on the jurisdiction and the size and purpose of the funds, money might be held by a public trustee or court funds office, a private trustee company, or managed under another court-approved arrangement. Where a child is expected to lack capacity as an adult, longer-term management may be needed.
A trust is not automatically required in every case. The right structure depends on the child's prognosis, the amount involved, the family's situation and local law. Families can ask why a particular option is being proposed and what alternatives were considered.
Fees, reporting and oversight
Every management arrangement involves some costs and some supervision. These may include management fees, investment fees, reporting obligations and the need for approval before larger expenses. Families should understand who checks spending decisions and how disagreements are resolved.
Comparing options means looking at costs alongside flexibility, accountability and continuity if circumstances change.
Planning for future needs
Compensation for a seriously injured child is often meant to fund care over many decades. Managing it involves practical decisions: how parents request money for equipment, therapy or housing modifications; what records are kept; and how the arrangement changes when the child turns eighteen.
Interactions with Medicare, Centrelink and the NDIS can also affect how money should be used and documented, which is another reason clear records matter.
Questions to ask before approval
Families can raise these points with their solicitor before the court hearing:
- Who will hold the funds and what are their total fees?
- How do we request money for a particular expense, and how long does it take?
- What happens when our child turns eighteen?
- Can the arrangement be changed later if needs change?
- Who should we contact if we disagree with a decision?
For your next conversation
- Draft settlement approval documents and supporting affidavits
- Expert reports on the child's future care, equipment and housing needs
- Written fee disclosure from any proposed trustee or manager
- A list of anticipated large expenses in the next few years
- Any medical evidence about expected adult decision-making capacity
Common questions
Can we, as parents, simply receive the money for our child?
Usually a court decides how a child's compensation is held, and it often does not go directly to parents without controls. The arrangement depends on local rules and the amount involved. Your solicitor can explain what the court in your jurisdiction is likely to require and how parents can access funds for the child's needs.
What happens to the money when our child turns eighteen?
In some cases, control may pass to the young adult. Where the child is expected to lack decision-making capacity, a continuing management arrangement may be needed. This should be discussed before the settlement is approved, so that medical evidence and legal planning for adulthood are in place early.
Sources & further reading
These references support the topic’s starting points. They do not determine the facts, standard of care or law applicable to an individual matter.