In a recent court case, a mother had to go to court to determine who would manage her 12 year old son’s inheritance after the father died without a will.

What Happened?

The father died intestate (without a will) in July 2018. At the time of his death, he lived in Ontario with his son and his son’s mother.

The father and mother had only one child together, born in March 2008, who was 10 years old when the father passed away.

The mother and son were the only beneficiaries to the father’s estate.

In December 2018, the mother was appointed as the estate trustee. The mother was entitled to the full amount of the father’s Ontario assets under Ontario’s Family Law Act.

However, the father also owned a residential condominium in the province of Quebec, which both the wife and son would share. The condominium could only be sold if a guardian of property was appointed for the son, with authority to participate on his behalf in its sale.

The mother first applied to court for:

1) the appointment of the Children’s Lawyer as the litigation guardian for the son, and

2) her appointment as the son’s guardian of property for both the purpose of the sale of the condominium and the management of the son’s property until he reaches age 18.

In January 2020, the Children’s Lawyer was appointed as the son’s litigation guardian.

The mother and the Children’s Lawyer agreed that the mother be appointed as the son’s guardian of property for the purpose of the sale. However, they did not agree as to whether a guardian of property for any other purpose was required or as to how the son’s inheritance was to be managed until he reached age 18 and became responsible for its management.

Parties’ Positions

The mother stated that if she were to be appointed to manage the son’s inheritance, she would place it in GICs. She also stated that she might, over time, place some of the funds in a Registered Education Savings Plan (“RESP”). She claimed that she would be able to provide for the son without resort to his inheritance; as such, the entirety of his inheritance would remain invested until the son reached age 18.

The Children’s Lawyer did not question the mother’s ability to manage the son’s property. However, the Children’s Lawyer stated that a guardian of property was not required other than for the purpose of the sale of the condominium. Additionally, the Children’s Lawyer requested that the son’s inheritance be paid to the Accountant for the Superior Court of Justice (“Accountant”), with whom it would remain until the son turned 18. If the inheritance was paid to the Accountant, then a guardian of property was not needed to manage it.

Finally, the Children’s Lawyer opposed placing any of the son’s inheritance in an RESP, submitting that an RESP would be at risk because of cases in which an RESP has been found to be an asset of the adult subscriber and not that of the child for whose benefit the RESP is intended.

Issues

At issue was how the son’s inheritance would be managed and by whom.

Decision

The court explained that payment of a minor’s inheritance to the Accountant is available under s. 36(6) of the Trustee Act, as an alternative to the appointment of a guardian of property under s. 47 of the Children’s Law Reform Act. If the minor’s inheritance is paid to the Accountant, no guardian of property need be appointed.

If a guardian of property is appointed, that individual will be required to post a bond unless the court orders otherwise. The guardian of property (a) would be required to keep records and submit periodic accounts to the Children’s Lawyer, and (b) may also be required to pass accounts from time to time. A detailed management plan must be filed with the court for approval.

In contrast, where a minor’s inheritance is paid to the Accountant, the funds are managed and invested by the Accountant pursuant to the Public Guardian and Trustee Act. If funds are required for the direct benefit of the minor before they reach age 18, then, such funds can be made available through the Minors’ Fund program of the Office of the Children’s Lawyer under r. 72.03(10) of the Rules of Civil Procedure.

After reviewing the evidence, the court ultimately agreed with the Children’s Lawyer that the son’s inheritance be paid to the Accountant.

The court stated that its decision was in no way a reflection on the mother’s ability to manage the son’s property or her abilities as a parent.

Rather, the court found that the mother’s proposal to invest the inheritance in an RESP posed some risk. It explained:

“For several reasons, there is a risk that a minor, upon reaching age 18, will not receive monies invested in an RESP. Those reasons include the conflicting case law as to whether monies so invested are protected in the same way as are funds held in trust for a minor.”

Additionally, by paying the inheritance to the Accountant, the mother would not be required to provide accounts to the Children’s Lawyer or to pass her accounts from time to time. The court found that this would provide a savings to both the mother and the son because the expenses (i.e., legal fees and disbursements) associated with those tasks would not be incurred.

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The knowledgeable estate lawyers at Cherkowski Marsden LLP have over 50 years of combined experience helping people in Vernon create Wills designed to protect their families’ futures. Everyone, no matter their stage in life or income bracket, should have a Will to retain control over the administration of their estate. We work with clients with both modest and robust estate planning needs, advising on matters including asset distribution, business considerations, foreign assets and trust considerations. For clients with business assets and those in need of assistance with succession planning, we also offer the benefit of our considerable business law experience. It is impossible to predict all of life’s variables but having an estate plan in place takes a great deal of stress out of the unknown.

Contact the knowledgeable estate planning lawyers at Cherkowski Marsden LLP in Vernon and Salmon Arm for trusted legal advice and guidance on your estate planning needs, including how best to maximize clarity and minimize financial implications for your estate trustees and heirs. We look forward to collaborating with you to achieve your goals with respect to your interests and the protection of your loved ones. We can be reached online or by phone at 250-308-0338 (Vernon office) or 250-803-9171 (Salmon Arm office).