Idaho Court-Approved Payments to Minors and Special Needs Trusts

Part of my Idaho Trusts Overview.

By Ronald W. Brilliant, Attorney at Law · Licensed in Idaho, Nevada & California · Last reviewed: September 2026 against the Idaho Code (Titles 15 and 68) as posted by the Idaho Legislature (July 1, 2026)

In This TopicIdaho TrustsTopic 11 of 14: Special Needs Trusts

When a child or a person with a disability wins or settles a legal claim, Idaho law controls what happens to the money. Title 68, chapter 14, “Court Approved Payments or Awards to Minors or Incompetent Persons,” sets out how expenses are paid, where the rest of the money goes, and when a court may order it into a special needs trust (Idaho Code §§ 68-1401 to 68-1405).

These rules matter to parents, guardians, and conservators of an injured child or incapacitated adult. They also matter to anyone paying a settlement or judgment to such a person.

When These Rules Apply

The chapter applies when both of these are true (Idaho Code § 68-1401):

1. A court approves a compromise of a judgment on a disputed claim of a minor or incompetent person, the signing of a release of a claim or a covenant not to enforce a judgment on such a claim, or a compromise of a pending case in which the minor or incompetent person is a party, or the court awards judgment for the minor or incompetent person (§ 68-1401(1)); and
2. The compromise, release, covenant, or judgment provides for paying or delivering money or property for the benefit of the minor or incompetent person (§ 68-1401(2)).

An incompetent person under this chapter includes anyone for whom a conservator may be appointed under Idaho Code § 15-5-401 (Idaho Code § 68-1404). A conservator is a person the court appoints to manage someone’s property. For when a conservator may be appointed, see Idaho conservatorship.

Paying Expenses First

As part of the order approving the settlement or judgment, the court shall also order that the reasonable and necessary expenses of the minor or incompetent person be paid from the money or property (Idaho Code § 68-1402(1)). Those expenses include, but are not limited to (§ 68-1402(1)):

• Medical expenses;
• Reimbursement to a parent, guardian, or conservator; and
• Attorney’s fees and costs approved by the court.

The order to pay expenses may be directed to a parent or guardian of the minor or incompetent person, to a guardianship or conservatorship of that person’s estate, or to the payor of the settlement or judgment (Idaho Code § 68-1402(2)).

Where the Rest of the Money Goes

What happens to the balance after court-approved expenses depends mainly on whether there is already a guardianship or conservatorship of the person’s estate.

Situation	What happens to the balance
No guardianship or conservatorship of the estate	Paid, delivered, or deposited in the manner the court determines, in its discretion, is in the best interest of the minor or incompetent person, including creating a special needs trust (Idaho Code § 68-1403(1))
There is a guardianship or conservatorship of the estate	Except as § 68-1403 otherwise provides, paid or delivered to the guardian or conservator of the estate (§ 68-1403(2))

Keeping the Money Outside the Guardianship or Conservatorship Estate

The guardian, conservator, or any person interested in the guardianship or conservatorship estate may file an ex parte petition with the court that made the order or awarded the judgment (Idaho Code § 68-1403(3)). For good cause shown, that court may order either or both of the following (§ 68-1403(3)):

• That all or part of the balance not become part of the guardianship or conservatorship estate, and instead be deposited in an insured account in a financial institution in Idaho, or in a single premium deferred annuity, subject to withdrawal only when the court authorizes it (§ 68-1403(3)(a)).
• If there is a guardianship of a minor’s estate, that all or part of the balance instead be transferred to a custodian for the minor under the Idaho uniform transfers to minors act (§ 68-1403(3)(b)). See Idaho transfers to minors.

On a petition by the guardian, conservator, or any person interested in the guardianship or conservatorship estate, the court may also order that all or part of the balance instead be paid to a special needs trust (Idaho Code § 68-1403(4)).

Notice to the Department of Health and Welfare

For a petition filed under § 68-1403, notice of the time and place of the hearing and a copy of the petition must be mailed to the director of the Idaho department of health and welfare at least fifteen (15) days before the hearing (Idaho Code § 68-1403(5)).

Special Needs Trusts Under Chapter 14

Chapter 14 sets rules for special needs trusts that a court orders funded with money of a minor or incompetent person (Idaho Code § 68-1405(1)).

Court Review and Supervision

If a court orders money paid to a special needs trust, the court must review and approve the trust’s terms, and the terms must satisfy § 68-1405 (Idaho Code § 68-1405(1)). The trust is subject to the court’s continuing jurisdiction and to court supervision to the extent the court decides (§ 68-1405(1)). The court may transfer jurisdiction to the court in the county where the minor or incompetent person lives (§ 68-1405(1)).

Required Findings

A special needs trust may be established and continued under this section only if the court determines all of the following (Idaho Code § 68-1405(2)):

1. The minor or incompetent person has a disability that substantially impairs the individual’s ability to provide for the individual’s own care or custody (§ 68-1405(2)(a)).
2. The minor or incompetent person is likely to have special needs that will not be met without the trust (§ 68-1405(2)(b)).
3. The money to be paid to the trust does not exceed the amount that appears reasonably necessary to meet those special needs (§ 68-1405(2)(c)).

Liens Paid First

A court order for payment into a special needs trust must include a provision that all statutory liens properly perfected at the time of the order, in favor of the Idaho department of health and welfare or any Idaho county or city, shall be satisfied first (Idaho Code § 68-1405(4)).

When the State, a County, or a City May Seek to End the Trust

The Idaho department of health and welfare, a county, or a city may petition the court for an order terminating the trust if it appears that both of these are true (Idaho Code § 68-1405(3)):

• Any of the requirements of § 68-1405 are not satisfied, or the trustee refuses without good cause to make payments from the trust for the beneficiary’s special needs (§ 68-1405(3)(a)); and
• The department, or a county or city in Idaho, has a claim against trust property (§ 68-1405(3)(b)).

Matters Governed Elsewhere

Chapter 14 does not describe how a special needs trust affects eligibility for public benefits. Those questions are governed by other law, including federal law, which this overview does not cover.

Related topics: trustee duties and liabilities and Idaho custodial trusts.

How I Can Help

I help parents, guardians, and conservators through the court approval of settlements and judgments for minors and incompetent persons, including petitions to place funds in restricted accounts, annuities, custodianships, or special needs trusts, and drafting trust terms for the court’s review. Request a consultation to discuss your situation.

This page provides general information about Idaho trust law, based on the Idaho Code, and is not legal advice. Court rules and case law also affect these matters. Every situation is different; consult an attorney about yours. Reading this page does not create an attorney-client relationship.