in a insurance settlement for a minor when the parent is asked to post a bond what does this mean?

The probate division of district court will not likely approve the appointment of a guardian unless a bond is posted by a reputable surety company that assures the court it will pay and indemnify the minor for any dissipation of the settlement proceeds.  The surety company charges a premium for the posting of this bond/undertaking and, sometimes, no surety company will be willing to accept this risk.  In these circumstances, it may be necessary to have a corporate guardian appointed instead of a parent or other relative. 

Many district courts will allow the guardian to set up a blocked account with a banking or investment company, thereby avoiding the necessity of a bond.  However, it will be difficult, if not impossible, to use the proceeds of the settlement during the term of the blocked account, which typically exists until the minor reaches 18 years of age.  The blocked account will usually pay a relatively low rate of interest and so the possibility of a structured settlement should always be investigated, as the bonding problems will be avoided and a tax-free payment plan can be negotiated that will result in a more favorable return of interest on the settlement proceeds.

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