Holding an Inheritance in Trust for a Minor in Ontario

When a child inherits money, the first question is usually who holds it until the child is old enough. A minor generally cannot manage a large inheritance alone, so the law and the document that gives the gift decide who looks after it.

This article walks through the main routes in Ontario: a trust set out in a will or beneficiary designation, payment into court, and a guardian of property. It is general information, and the right route depends on the amount and the paperwork.

Who is a minor and when does the money become theirs

In Ontario, a person reaches the age of majority and stops being a minor at 18. A child generally receives their share at 18, or at the age stated in the will or beneficiary designation.

If a will or designation sets up a trust, the trustee holds and invests the money until the stated age. A trustee investing trust property must use the care, skill, diligence and judgment of a prudent investor.

When there is no will or no trust

Where there is no will and a child's share is $35,000 or more, the money is paid into court and held by the Accountant of the Superior Court of Justice. Smaller amounts may go to a parent or guardian of property. The same $35,000 threshold applies to life insurance with no named trustee.

Where no guardian of property has been appointed, a person who owes money to a child may pay it to a parent the child lives with or to the child's lawful custodian, but only up to the prescribed amount.

Money paid into court is held until the age of entitlement, usually 18. Parents can ask for a payment out through the Minors' Funds Program only if they cannot afford an expense the child needs.

Becoming a guardian of a child's property

A court may appoint a guardian of a child's property on an application made on notice to the Children's Lawyer under the Children's Law Reform Act. The guardian must post a bond payable to the child and must transfer all of the child's property to the child at 18.

The bond requirement does not apply where the court appoints a parent and considers a bond unnecessary. Whether a bond would be required in your case is something the court decides.

The Office of the Children's Lawyer

The Office of the Children's Lawyer must be served with an application to vary a trust or to pass estate accounts where a minor or unborn person has an interest. It represents the child and does not take instructions from the parents.

If a trust needs to change, the Superior Court of Justice may approve an arrangement varying or revoking a trust, or enlarging trustees' powers, on behalf of minors and others who cannot consent themselves. The court will not approve it for a minor unless it appears to be for that person's benefit.

When accounts are passed, the notice of application and draft judgment must be served on everyone with an interest, and on the Children's Lawyer where minors are involved. In Ontario, that service must be at least 60 days before the hearing.

What to do next

• Find the will, trust document or beneficiary designation and note any age stated for payment.
• Find out roughly how much the child is to receive and whether it is above or below $35,000 if there is no will.
• If the money is held in court, remember that parents can ask for a payment out only if they cannot afford an expense the child needs.
• If you are holding money for a child, how it may be used depends on the document and any court order, so confirm with a lawyer before paying anything out.
• If you want to be guardian of property, ask a lawyer about the application and the bond.
• If the trust terms no longer suit the child, ask a lawyer about a court-approved variation.

Frequently asked questions