Dos and Don'ts for Minor Children
Minors, identified as children, under their province’s age of majority (age 18, or 19 in some provinces) cannot inherit money or property. Nor can they live independently or enter into contracts without a legal guardian’s approval, as they are not of legal age. As such, it is crucial that proper steps be taken to protect the rights and entitlements of your minor-aged children in the case of your death. The following are some things to do and some to avoid.
- Appoint a legal guardian in your will to supervise, and be responsible for, the child’s upbringing, in the event that both you and your spouse die. Although the appointment of a guardian in a will is not legally binding upon the court, judges will often favourably consider the wishes of the deceased parents in determining the child’s legal guardian.
- Single parents, especially those with joint custody, should get legal advice prior to appointing a legal guardian.
- Appoint an alternate guardian in your will in case your primary guardian becomes unable or unwilling to act.
- Use a will to direct money or other property, including life insurance proceeds, into a trust to hold money or other property you want your (current or future) children/grandchildren to inherit.
- In your will, appoint a trustee (and alternate) for this trust. This appointment is legally binding. The trustee may be a different person than the guardian.
- Stipulate what types of expenses you want paid out of the trust for raising and educating the child.
Consider appointing different people to the guardian and trustee roles to provide oversight of the money. The guardian’s role is to feed, clothe and look after the child; money from the trust will be required. The trustee’s role is to manage the trust money, ensure the guardian’s requests are reasonable and meet the objectives of the trust.
- Name a minor child as a beneficiary of a life insurance policy, a registered plan (such as an RRSP) or an estate. Instead, consider naming the estate as the beneficiary, letting the will direct money into a trust for the child.
What if a minor child inherits money outside of a will? The Office of the Public Trustee (or equivalent) will step in to hold and invest the money in trust until the child reaches the age of majority. What’s wrong with that? Nothing—as long as you want the government to oversee the money AND are willing for your child to receive the full amount upon his/her 18th or 19th birthday.
- Wait until your first, or last, child is born before putting a will in place. Wills can be drafted to take into consideration children not yet born.
- Collapse the trust when the child reaches the age of majority. You may stipulate that the property be held in trust for the child until some later date and may give the trustee powers to use the property until that time to continue paying the child’s expenses.