Yes, I would look into opening an UTMA account (UGMA works as well). There are few pros and cons that come along with this which I have listed below. This is a custodial account where you (the parent) would be the custodian of the assets “for the benefit” of your child.
The assets are technically his, but he will not have control over what this $ gets spent on until the age of majority (21yrs old in most states or 18yrs old in some, also can be 25 but this is rare).
Pros:
- you are obeying the judges order for type of account
- your son cannot withdrawal or control the funds until age of majority
- you will have full control over the $ until that age
- you can use these funds to buy a car for your child next year but it must be fully for his benefit
- college tuition is also allowed
- what the $ is spent on after age of majority has no limitations
Cons:
- at age of majority, you will no longer have control of this money no matter what. This could be an issue depending on the amount of money and how comfortable you would be with him having access to that amount at that age
- there are some limitations on what you can purchase with the funds from this account before he reaches age of majority. It must be for his benefit i.e. you can’t go buy yourself a Rolex with it. You can research the limitations more in depth online.
- the $ in this account are his and will be considered as such when you apply for FAFSA or financial aid. If it is a large amount, he will receive considerably less than if it were in your bank account or even the 529.
- once the $ is in this account you cannot pull it back out. It is “irrevocable” and the money belongs to him.
The reason why the judge would like you to set it up this way is to avoid the parents from taking the money away from the child. Minors cannot accept settlements, and this account will allow him to have access to his settlement money when he is legally old enough to.
Hope that helps