Trustee Duties for a Trust Left to a Minor in Ontario

When a child inherits, the money cannot simply be handed to the child, and it is not always handed to a parent either. Someone has to hold and manage it until the child is old enough, and the rules depend on how much is involved and how the gift was set up.

This article explains who can hold a minor's inheritance, what a trustee is expected to do, when money goes into court, and when the child is paid out. The exact wording of the will or trust matters a great deal, so a lawyer can confirm how it applies to you.

Who can hold a child's inheritance

Parents are not automatically entitled to receive and manage a child's money. Their authority to do so generally comes from a court order appointing a guardian of property, and the application must be served on the Office of the Children's Lawyer. There is an exception for smaller amounts: in most cases where a child is to receive $35,000 or less, the money does not have to be paid into court, and under the Children's Law Reform Act it can be paid to the parent the child lives with or to a person with lawful custody.

There is another route. If a will or other legal document names a trustee to hold the child's share, the money does not generally have to be paid into court. This is why many families set up a trust for a child, with a named trustee who holds the money until the age the document sets.

A related point: if a minor is named as the only executor, administration with the will annexed is granted to the minor's guardian until the minor turns 18.

What a trustee must do

A trustee must invest trust property with the care, skill, diligence and judgment of a prudent investor. This applies, for example, to an inheritance held in trust for a minor. In plain words, the job is to protect and grow the child's money sensibly, not to chase high returns or to use the money for the trustee's own purposes.

If a trustee makes a mistake, the court may relieve the trustee wholly or partly from personal liability for a breach of trust, but only if the trustee acted honestly and reasonably and ought fairly to be excused. Investment losses are dealt with separately. That is not a safety net to count on, so careful habits matter.

• Keep the child's money separate from your own.
• Follow the terms of the will or trust document first.
• Write down every payment in and out, and keep receipts.
• Invest prudently and review the investments from time to time.
• Ask a lawyer before paying out money early or in a way the document does not clearly allow.

When the amount decides the route

The amount a child is to receive affects whether a court is involved. The table sets out the general pattern.

Because the two ranges meet at $35,000, an amount at or near that figure is worth confirming with a lawyer.

Money held in court and when it is paid out

A minor's money paid into court is held by the Accountant of the Superior Court of Justice. It is paid out at 18, or at a later age set by a will, trust deed or court order. Before then, a parent can ask for money for the child's benefit through the Office of the Children's Lawyer (Minors' Funds Program).

The Accountant charges 3% on receipts and disbursements and a care and management fee of 0.60% a year. No fee is charged on the first payment into court for a child, and fees are capped so they never exceed the month's interest. These figures can change, so check the current amounts.

Court can also come up when an estate is being wrapped up. Whether that affects a child's share depends on how the will or trust is set up and on the facts, so it is worth confirming with a lawyer. On the final passing of accounts, a personal representative or trustee must pay into court any money belonging to a minor, a mentally incapable person, or a person whose address is unknown. The exception is where the Public Guardian and Trustee is guardian of property for the person entitled: then the money is paid to the Public Guardian and Trustee instead of into court.

What to do next

• Get a copy of the will or trust document and read what it says about the child's share and the age of payout.
• Find out whether a trustee is named, and whether that person is willing to act.
• Work out roughly how much the child will receive.
• If no trustee is named, ask a lawyer whether a guardian of property application is needed.
• Open a record-keeping system before any money arrives.
• Talk to a lawyer before spending any of the child's money, even for something that clearly benefits the child.

Frequently asked questions