Illustrative Scenario: Casey — Estate Planning for a Minor Child | Frontier Law

Disclaimer: This scenario is fictional and for general information only. It does not constitute legal advice. Every situation is unique, and the information here may not apply to your specific circumstances. For advice tailored to your situation, consult with a qualified legal professional licensed to practice law in Ontario.

The Scenario

Casey is a 42-year-old single parent living in Toronto, Ontario. She has a 10-year-old son, and she’s been thinking about what would happen to him if something happened to her. Casey owns a home, has RRSPs, a TFSA, and some investments. She also has life insurance through her employer.

Casey’s parents are elderly and not in a position to care for her son. Her sister lives in British Columbia and has two children of her own. Casey wants to make sure her son is cared for and that her assets are used for his benefit, but she’s not sure how to structure this.

The Legal Issue Raised

This scenario raises questions about how to plan for the care and financial management of a minor child in the event of a parent’s death. Specifically, it highlights issues related to:

Guardianship: Who will care for the child if the parent dies before the child turns 18?
Asset Management: Who will manage the assets left for the child?
Timing of Inheritance: When should the child receive their inheritance?
Protection of Assets: How can assets be structured to ensure they are used for the child’s benefit?

How These Issues Are Commonly Analyzed

When analyzing these issues, courts and legal professionals often consider several factors:

Guardianship Considerations

In Ontario, parents can name a guardian for minor children in a will. However, courts have the final authority to appoint guardians and typically consider:

The wishes expressed in the will
The child’s relationship with the proposed guardian
The guardian’s ability to care for the child (financially, emotionally, and practically)
The child’s preferences, if the child is old enough to express them
The stability and continuity of the child’s living situation

Trusteeship and Trust Structures

If assets are left to a minor child, someone must manage those assets until the child reaches the age of majority (18 in Ontario). Courts often consider:

Whether the guardian and trustee should be the same person or different people
The trustee’s financial management capabilities
The terms of any trust created in the will
How the trust provides for the child’s needs during minority

Age of Majority and Inheritance Timing

While the age of majority is 18 in Ontario, many estate plans delay when children receive significant inheritances. Courts often consider:

The child’s maturity and ability to manage assets
The size of the inheritance
Whether the trust provides for the child’s needs (education, housing, etc.) during minority
The potential risks of providing large sums to young adults

Trust Provisions

When analyzing trust provisions, courts often consider:

Whether the trust terms are clear and specific
Whether the trust provides adequate guidance for the trustee
Whether the trust balances the child’s immediate needs with long-term asset protection
Whether the trust terms are flexible enough to adapt to changing circumstances

Why This Area Causes Confusion

This area of law causes confusion for several reasons:

Complexity of Multiple Roles: Understanding the difference between guardianship (caregiving) and trusteeship (financial management), and when these should be separate, can be confusing.
Court Discretion: Even with a will naming a guardian, the court has the final say, which can create uncertainty about whether the named guardian will actually be appointed.
Trust Terminology: Terms like “testamentary trust,” “trustee,” and “beneficiary” can be unfamiliar to many people, making it difficult to understand how assets will be managed.
Timing Decisions: Deciding when a child should receive their inheritance involves balancing protection with autonomy, and there’s no one-size-fits-all answer.
Changing Circumstances: As children grow older and circumstances change, estate plans may need to be updated, which can be overlooked.
Intestacy Rules: Many people don’t realize that if they die without a will, the court will decide both guardianship and how assets are managed, which may not align with their wishes.

Key Takeaways

Estate planning for minor children involves both caregiving and financial management considerations
Wills allow parents to express their wishes about guardianship and trusteeship, but courts have the final authority
Trusts can provide structure for how assets are used and when they’re distributed
Separating guardianship and trusteeship roles can be beneficial in some situations
Estate plans should be reviewed and updated as children grow older and circumstances change
Dying without a will means the court will make decisions about both caregiving and asset management