Trustee for Minor Beneficiary Ontario: What You Need to Know

Written By Berel Goldberg
Trustee reviewing documents for a minor beneficiary in Ontario..jpg

When a child under 18 is set to inherit money or property in Ontario, the law does not allow them to receive it directly. This creates a challenge for parents and estate trustees who must ensure the inheritance is managed until the child becomes an adult.

In Ontario, a trustee must be appointed to hold and manage assets on behalf of a minor beneficiary. The law provides specific options for how this arrangement can be set up.

The role of trustee for a minor beneficiary comes with important legal responsibilities. You need to understand how Ontario law governs these situations and what your options are.

Different approaches can affect costs and access to funds. The rules also depend on the amount of the inheritance and whether estate planning was done before death.

This article explains the legal framework for inheritances for minors in Ontario. It covers management options and practical considerations for protecting a minor beneficiary's interests.

You'll learn about the Office of the Children's Lawyer, how to choose management options, and key steps to take.

Understanding the Role of a Trustee for Minor Beneficiaries

A trustee for a minor beneficiary in Ontario has specific legal duties and powers. These rules govern how assets are managed until the child turns 18.

The Trustee Act and related estate laws set standards for handling trusts for minor children. Requirements include managing the trust account and making distributions according to the law.

Key Responsibilities of a Trustee

Your main duty as a trustee is to manage and protect the minor's assets in their best interest. You must keep accurate records of all trust property, income, expenses, and distributions.

You need to invest trust funds carefully, following the standards in the Trustee Act. This means making safe investment choices and avoiding unnecessary risks with the minor's money.

You must provide regular accounting to show how you've managed the trust. In Ontario, you are required to account to the minor beneficiary once they turn 18 and may also need to provide accounting to the court or other interested parties.

You can use trust funds for the child's benefit before they reach 18. This includes education, healthcare, housing, and other needs that support the child's well-being.

Trustee Selection Criteria

The person creating the trust should choose someone with strong financial management skills. The trustee must be trustworthy and able to put the child's interests first.

It's helpful to select someone familiar with the family situation and the child's needs. Local knowledge and hands-on involvement can be important.

The trustee should be likely to outlive the trust term and remain capable of managing the responsibilities. Naming an alternate trustee is also a good idea in case your first choice cannot serve.

Professional trustees, such as trust companies, can be appointed for larger estates or complex situations. They bring expertise but charge fees that reduce the trust assets.

Trustee Powers and Limitations

Your powers as trustee are defined by the trust document, the Trustee Act, and Ontario law. You have authority to invest funds, pay expenses, and make distributions according to the trust terms.

You cannot use trust funds for your own benefit or mix them with your personal assets. The trust account must remain separate from your own finances.

You cannot delegate your core duties to someone else, though you can hire professionals for specific tasks like accounting or legal advice. If the will does not create a proper trust for the minor beneficiary, the funds must be paid to the Public Guardian and Trustee.

You must follow the terms set out in the trust document regarding when and how to distribute assets to the beneficiary. You face personal liability if you breach your duties or mismanage trust assets.

It's important to understand your obligations and seek professional guidance when needed.

Legal Framework Governing Inheritances for Minors in Ontario

In Ontario, minors under 18 cannot directly receive or control inherited assets. The province's estate laws require specific procedures and protections when children inherit property or money.

Relevant Ontario Laws and Acts

The Succession Law Reform Act sets out the main rules for how estates pass to beneficiaries in Ontario. It includes provisions that protect minors who inherit property.

This Act works together with the Trustee Act, which governs how trustees must manage and invest assets held for minor beneficiaries. The Rules of Civil Procedure outline steps to follow during estate administration when minors are involved.

You must serve notice on the Office of the Children's Lawyer when a minor beneficiary is entitled to receive inheritance. The legislation also guides trustees on acceptable investment methods and how to account for their management decisions.

Age of Majority and Its Impact

In Ontario, the age of majority is 18 years old. Until a child reaches this age, they cannot legally own or control significant assets directly.

If your estate plan doesn't address this, the court may appoint someone to manage the inheritance until the child turns 18. For amounts over $35,000, the inheritance typically gets paid into court and held by the Accountant of the Superior Court of Justice.

Parents do not automatically have the right to manage their children's inherited assets. Without proper planning in your will, a surviving parent must apply to court for guardianship of property, which creates delays and legal costs.

Intestacy and Its Consequences

When someone dies intestate (without a valid will), Ontario's intestacy rules determine who inherits their estate. If minor children are beneficiaries under intestacy, their inheritance cannot pass directly to them.

Intestacy often leads to involvement by the Public Guardian and Trustee, who may become the trustee for your children's inheritance. This organization charges management and trustee fees that reduce the assets available to your children.

The intestacy rules provide no flexibility in how or when your children receive their inheritance. The funds must be paid out when each child turns 18, regardless of their maturity or financial circumstances.

Options for Managing Inheritances for Minor Beneficiaries

When a minor is entitled to inherit in Ontario, the law does not allow children under 18 to receive funds directly. Four main options exist for managing these assets: establishing a trust through the will, appointing a guardian of property, paying funds into court, or arranging direct payment to a parent or guardian under specific conditions.

Trusts Created by Will

A testamentary trust is the most flexible option for managing a minor's inheritance. You create this trust within your will to control how and when beneficiaries receive their assets.

The trust allows you to appoint a trustee who manages the funds according to your instructions. You can set conditions for distributions, such as releasing funds for education or delaying full access until the beneficiary reaches age 25.

Your will should clearly outline the trustee's powers and responsibilities. The trustee must manage investments, file tax returns for the trust, and keep records of all transactions.

They can distribute funds for the minor's care, education, and maintenance as directed in the will. This option avoids court applications and provides more privacy than other methods.

You choose someone you trust to make decisions about the funds rather than leaving those choices to the court or a government official.

Guardian of Property Appointment

If your will does not create a trust, someone must apply to become guardian of property for the minor beneficiary. Parents do not automatically have this right in Ontario.

The application requires filing specific forms with the court and notifying the Office of the Children's Lawyer. You must submit a management plan showing how you will handle the minor's money.

This plan includes investment strategies, expected expenses, and how you will protect the assets. For larger inheritances, the court may require a trust company or other insured professional to act as guardian.

This protects the minor's interests and ensures proper financial management. The guardian of property is separate from a guardian of the person.

A guardian of the person makes decisions about the child's care and upbringing. A guardian of property only manages financial assets.

Funds Paid into Court

When no suitable alternative exists, inheritance funds can be paid to the Accountant of the Superior Court of Justice. This option often applies when there is no will or no appropriate guardian.

The Accountant holds the funds until the minor turns 18. During this time, a parent or guardian can apply to access money for the child's benefit by submitting forms and receipts.

Each request requires court approval. The Public Guardian and Trustee may become involved in managing the funds if no other guardian is suitable.

This government office protects the interests of minors and other vulnerable people. This is typically the most restrictive and least flexible option.

You cannot make investment decisions, and accessing funds requires ongoing court applications with supporting documentation. The process is time-consuming and can be costly for the estate and the child's caregivers.

Direct Payment to Parent or Guardian

Under Section 51(1) of the Children's Law Reform Act, inheritances of $35,000 or less can be paid directly to the child's parent or person with lawful custody without requiring a court order or formal guardianship appointment.

This is a strict statutory threshold set by Ontario Regulation 110/01, not a discretionary assessment by the estate trustee. If the inheritance is exactly $35,000, it can be paid to the parent. If it is $35,001 or more, it must either be paid into court to the Accountant of the Superior Court of Justice or managed through a court-appointed Guardian of Property, unless a testamentary trust has been established in the will.

The parent or person receiving the funds becomes the guardian of property for that amount and must manage it responsibly for the child's benefit until they turn 18.

Most estates require a certificate of appointment of estate trustee before making any distributions. This arrangement carries risks.

Without court oversight or formal trust terms, there is no guarantee the funds will be used for the child's benefit. The parent or guardian has no legal obligation to provide formal accounting for how they spend the money.

Consider this option only for amounts at or below the statutory threshold where the administrative costs of other methods would be disproportionate to the inheritance value.

The Office of the Children's Lawyer and Other Key Parties

When a minor is a beneficiary in Ontario, several government offices and legal parties may become involved to protect the child's interests. The Office of the Children's Lawyer often plays a central role, while the Public Guardian and Trustee and the court system provide additional oversight.

When the Office of the Children's Lawyer Must Be Notified

You must serve the Office of the Children's Lawyer (OCL) in specific estate and trust matters involving minor beneficiaries. The OCL must receive notice when you apply for a certificate of appointment of estate trustee if any beneficiary is under 18.

The OCL must also be served in applications to vary a trust, pass estate accounts, or sell or mortgage a child's real property. You need to notify them in matters that may affect a child's interest, such as will challenges, estate trustee removal, or claims for support by a dependent.

When you serve the OCL in an estate trustee application, your notice should list all minor beneficiaries and their parents' or guardians' names and addresses. You must include the approximate dollar value and percentage of each minor's interest in the estate and attach a copy of the deceased's entire last will if one exists.

The OCL does not administer estates, act as estate trustee, or serve as guardian of property for minors. They represent the child's interests in the legal proceeding but do not receive instructions from or report to the child's parents.

Role of the Public Guardian and Trustee

The Office of the Public Guardian and Trustee provides oversight when minors receive substantial inheritances. Under the Children's Law Reform Act, when a child's inheritance exceeds $35,000 and there is no testamentary trust or suitable guardian of property, the funds must be paid into court to the Accountant of the Superior Court of Justice for management.

The Accountant of the Superior Court holds these funds until the child turns 18 or reaches the age specified in the will. If your child has money held by the Accountant, you can request funds for necessary expenses by applying directly to the Accountant. The Public Guardian and Trustee—not the Office of the Children's Lawyer—typically reviews the social and economic merit of such requests when made as administrative out-of-court applications under the Children's Law Reform Act.

For inheritances of $35,000 or less, Section 51(1) of the Children's Law Reform Act allows the estate trustee to pay the money directly to the parent the child lives with or the person with lawful custody. That person becomes the guardian of property for those funds and must manage them responsibly until the child reaches 18.

The Court Process and Key Forms

A guardianship application may be necessary when someone needs legal authority to manage a minor's property interests. The court appoints a guardian of property through this process when the child's inheritance or property requires ongoing management.

You must file specific forms depending on the type of application. For estates valued at $150,000 or more, estate trustee applications require forms under Rules 74.04 and 74.05 of the Rules of Civil Procedure.

For estates under $150,000, you can use the simplified Small Estate Certificate process governed by Rule 74.1 of the Rules of Civil Procedure. Even in Small Estate applications, the Office of the Children's Lawyer must still be notified if any beneficiary is a minor.

Applications to sell or mortgage a child's real property follow Rule 67. The court may also appoint a guardian of the person if the child requires someone to make personal care decisions.

This is separate from property guardianship. You should file a Request for Notice of Commencement of Proceeding with the court if you want to ensure you receive updates about estate applications affecting your child.

Practical Estate Planning Considerations

When planning your estate with minor beneficiaries in Ontario, you must decide how trusts will function and who will manage them. The right structure protects your children's inheritance and gives trustees the tools they need to make sound decisions.

Structuring Trusts for Flexibility and Protection

Your trust structure should balance protection with flexibility as your children grow. You can specify distribution ages beyond 18, such as releasing portions at 21, 25, and 30.

This approach prevents a young adult from receiving a large sum before they're ready to manage it. Consider allowing your executor to distribute funds for education, health, and maintenance needs before the final distribution age.

You might also give your trustee discretion to adjust distributions based on individual circumstances. For example, one child might need funds for medical treatment while another requires business startup capital.

Spendthrift provisions protect the trust assets from your child's creditors. They also prevent beneficiaries from borrowing against future distributions.

Many parents include incentive clauses that tie distributions to milestones like completing education or maintaining employment. Your trust document should specify what happens if a beneficiary dies before receiving their full inheritance.

You can direct these assets to that child's descendants, siblings, or other beneficiaries you name.

Choosing and Instructing Trustees

Selecting a trustee requires careful thought about who can manage money responsibly. Family members often serve as trustees, but they need financial literacy and time to handle the role properly.

Professional trustees like trust companies or lawyers offer expertise but charge fees for their services. Under Section 61 of the Trustee Act, trustees are entitled to "fair and reasonable" compensation for their services. While the statute does not specify a percentage, Ontario case law—particularly Laing Estate and Flaska—established that roughly 5% of the estate's value is typically considered reasonable, calculated as approximately 2.5% on capital and income receipts and 2.5% on capital and income disbursements.

Many corporate trustees and trust companies use an annual fee model (often 1-5% of assets per year), but this is a private banking arrangement negotiated between the parties, not a statutory requirement.

You can appoint co-trustees by pairing a family member who knows your children with a professional who handles investments and tax compliance.

Your trust instructions should clearly state whether trustees must act unanimously or can make certain decisions independently. Compensation terms should be outlined in your will.

You should also name alternate trustees in case your first choice cannot serve. Include guidance about how the trustee should make decisions. Should they prioritize education spending or support entrepreneurial ventures?

Clear instructions reduce conflicts and help trustees feel confident in their choices.

Tax and Investment Issues for Minor Inheritances

Trust accounts face different tax rules than personal accounts. Trusts in Ontario pay tax at the highest marginal rate unless income is distributed to beneficiaries.

Your estate trustee should work with an accountant to determine the most tax-efficient distribution strategy each year. Attribution rules can apply when minor children receive investment income.

Income earned on capital you give to children under 18 may be taxed back to you or your estate. Life insurance proceeds and registered accounts like RESPs avoid many of these issues.

Your trustee needs authority to seek professional investment advice and move funds into appropriate investments. A diversified portfolio balances growth with preservation of capital.

Many trustees use a trust account at a financial institution that offers investment management services. Beneficiary designations on registered accounts and insurance policies pass assets directly to named individuals, bypassing your estate.

However, naming minor children directly as beneficiaries creates problems since they cannot legally receive substantial inheritances. Instead, name your estate or a testamentary trust as beneficiary to ensure proper management.

Your legacy planning should coordinate all these elements so your children receive their inheritance through the most tax-efficient and legally sound structure available.

Distribution and Administration of Estate Assets for Minors

When you administer an estate with minor beneficiaries, you face specific rules about how and when to distribute assets. Estate administration requires careful attention to timing, ongoing oversight duties, and proper transition procedures when the child turns 18.

Timing and Method of Distributions

You cannot release estate assets directly to a minor beneficiary in Ontario. The distribution method depends on the inheritance amount and whether a trust exists.

Under Section 51(1) of the Children's Law Reform Act, for inheritances of $35,000 or less, you can pay the funds to the child's parent or person with lawful custody "in trust" for the minor. This statutory threshold is set by Ontario Regulation 110/01. If the inheritance is exactly $35,000, it can be paid to the parent. If it exceeds $35,000, other arrangements are required.

Larger amounts require one of three approaches:

Payment into Court – You deposit funds with the Accountant of the Superior Court of Justice, which holds them until the minor turns 18. The province charges a 3% fee on investment income and withdrawals, plus a care and management fee.

Trust established in the Will – The named trustee manages assets according to the Will's terms. This allows flexible distribution timing and specific conditions.

Guardian of property – A Court-appointed guardian manages the assets. The parent must apply to the Court for this appointment, which involves significant costs and time.

Most estates require a certificate of appointment of estate trustee before making any distributions. For estates valued under $150,000, you can use the simplified Small Estate Certificate process under Rule 74.1 of the Rules of Civil Procedure. When minor beneficiaries exist, you need to notify the Office of the Children's Lawyer during the probate application regardless of the estate size.

Monitoring and Reporting Obligations

Your responsibilities extend beyond the initial distribution. If you serve as trustee through a Will-based trust or as guardian of property, you must maintain detailed records of all transactions involving the trust account.

You need to track income earned, expenses paid, and any distributions made for the minor's benefit. Keep receipts and documentation for purchases that support the child's care, education, or other needs related to your legal obligation to support the beneficiary.

Court-appointed guardians face stricter reporting requirements. You must submit regular accountings to the Court showing how you managed the funds.

The Court reviews these reports to ensure you're acting in the minor's best interests.

Transition Upon Reaching Age of Majority

When the minor beneficiary turns 18, your role as trustee or guardian typically ends. You must prepare a final accounting that shows all transactions from the beginning of your trusteeship.

If the funds were paid into Court, the now-adult beneficiary can withdraw the full amount directly. You have no further role in this process.

For trust-based arrangements, you release the assets according to the Will's terms. Some Wills specify a later age (such as 21 or 25) or staged distributions to promote financial responsibility.

You continue managing the trust until all conditions are met. You should provide the beneficiary with complete documentation of how the assets were managed during their minority.

Transfer any remaining funds, close the trust account, and obtain a signed release acknowledging the final distribution.

Conclusion

Acting as a trustee for a minor beneficiary in Ontario comes with important legal duties and responsibilities. You need to manage assets carefully, follow the trust terms, and always act in the child's best interests.

The rules around minors and inheritance exist to protect children until they reach age 18. If you're facing the challenges of being a trustee or need to set up a trust for minor beneficiaries, B.I.G. Probate Law Ontario can help.

Our team understands the legal requirements and can guide you through every step of the process. We'll help you meet your obligations while protecting the interests of the young beneficiaries in your care.

Contact us today to discuss your situation:

Phone: (289) 301-3338
Email: Info@probatelaw-ontario.ca
Website: probatelawgroup.ca

You can also book a free call to speak with our experienced team. We'll review your specific circumstances and provide clear advice on managing trusts for minor beneficiaries.

Whether you're setting up a new trust or administering an existing one, proper legal guidance makes the process smoother and helps you avoid costly mistakes.

Frequently Asked Questions

Minors in Ontario cannot directly receive an inheritance, which creates specific legal requirements for managing their assets. A trustee holds and manages these funds until the minor reaches adulthood or another specified age.

What is a trustee for a minor beneficiary in Ontario?

A trustee for a minor beneficiary is a person or institution legally appointed to hold and manage inheritance money or assets on behalf of a child under 18. The trustee has a legal duty to protect the minor's interests and use the funds appropriately for the child's benefit.

In Ontario, minors cannot legally control significant assets themselves. The trustee acts as the legal owner of the inheritance until the minor reaches the age specified in the trust terms.

Who can be a trustee for a minor beneficiary in Ontario?

You can name a trustee in your will before death. This person could be the estate trustee, a family member, a trusted friend, or a trust company.

Parents are not automatically trustees for their child's inheritance. While parents are automatically guardians of the person for their children, they must be specifically appointed as guardians of property through a court application to control their child's inheritance.

The court typically gives preference to parents when appointing a guardian of property. However, if the inheritance amount is large, the court may require a trust company to be involved.

What happens when a minor is listed as a beneficiary?

The estate trustee must notify the Office of the Children's Lawyer when applying for probate if any beneficiary is under 18. This requirement applies whether the child inherits through a will or through intestacy laws.

The inheritance cannot be paid directly to the minor. Instead, the estate trustee must use one of four legal methods to manage the funds.

The available options depend on the amount involved and whether a trust was established in the will.

Why do minors in Ontario need a trustee for an inheritance?

Ontario law protects minors from receiving large sums of money they may not be ready to manage responsibly. A trustee ensures the funds are preserved and used appropriately until the child matures.

The trustee structure allows for controlled access to funds during childhood and prevents misuse of the inheritance.

What does a trustee for a minor actually do?

The trustee holds legal title to the inheritance and makes decisions about how the funds are invested and spent. They must follow the terms set out in the will or court order that appointed them.

The trustee can typically use the funds for the minor's benefit before they reach 18. This might include payments for education, medical care, or other necessary expenses.

The specific rules depend on the terms established in the will or by the court. The trustee must keep proper records of all transactions.

They are legally accountable for managing the funds prudently and in the minor's best interests.

What happens if no trustee is named for a minor in Ontario?

If your will does not name a trustee or set trust terms for a minor's inheritance, there are three options based on the amount involved.

Under Section 51(1) of the Children's Law Reform Act, for inheritances of $35,000 or less, the funds can be paid to the child's parent or person with lawful custody without a formal court process. This statutory threshold is set by Ontario Regulation 110/01.

For amounts exceeding $35,000, the inheritance must be paid to the Accountant of the Superior Court of Justice. The Accountant holds the funds until the child turns 18.

During this time, a parent or guardian can apply to the Accountant to access money for the child's benefit by submitting forms and receipts. The Public Guardian and Trustee may review these requests. The province charges a 3% fee on investment income and payments out, plus care and management fees.

The third option is a court application to appoint a guardian of property. This process is complex and costly.

A comprehensive management plan for the funds is required. This option is usually only cost-effective for significant inheritances or when the child is many years away from turning 18.

Legal Sources & References

Berel Goldberg
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Certificate of Appointment of Estate Trustee in Ontario