Wills containing benefits held in trust for minor children would usually include clauses authorizing the estate trustee to distribute from the child’s trust directly to the child’s parent, custodian, or guardian. With the exception of a relatively small amount, the Office of the Children’s Lawyer is likely to question the validity of such distribution.
Normally, an estate trustee cannot delegate fiduciary obligations to someone else, despite the presence of such clauses in wills expressing the testator’s intention that such delegation can occur. Considering the limited permissive distributions pursuant to s. 51 of the CLRA, only an appointed trustee can possess and spend trust funds on behalf of the minor child. Should a parent intend that the custodian or guardian receive distributions from the estate trustee for the benefit of a minor child, the will should expressly appoint him or her as a sub-trustee for such purpose, giving rise to all the obligations that flow from the appointment of a trustee. If this is not done, the estate trustee could be charged for breach of trust. In any event, the custodian or guardian is accountable as a de facto trustee.
Section 51 of the CLRA states that where a guardian of a child’s property has not been appointed, the estate trustee may pay or deliver cash or personal property to a custodian for the benefit of the minor child, up to an all-inclusive maximum value of $10,000. Under s. 51(3), the estate trustee is allowed such payment(s) or delivery of personal property.
In Ontario, since 1st October, 1982, parents could make a testamentary appointment of:
1) A custodian for a minor child(ren); and
2) A guardian of such child(ren)’s property.
Such a will typically read something like the following:
“In the event that both my spouse and I die during the minority of any child of ours, it is my wish and I so direct that and be appointed to have custody of such minor child(ren) NAME and NAME, to the extent that they are capable of so doing, be the guardians of such minor child(ren)’s property during said minority. I so appoint NAME and NAME as such.”
Regarding the testamentary custodial appointment, it is pertinent to inquire about how well such an appointment is in keeping with the terms contained in a testamentary trust for the minor child(ren) as established in the parent’s will. The estate trustee will normally have rights and obligations with respect to the investment and maintenance of the assets settled on the testamentary trust. If the custodian and the estate trustee are different individuals (which is quite likely), the two of them will have to work together for the benefit and welfare of the minor child(ren). Hence, while appointing estate trustees and custodians in a will, a parent is to ensure, to the extent possible, that the estate trustee and the custodian can work together.
For substitute parenting, it is not uncommon for parents of minor children to put together a letter or memorandum to the appointed custodians and/or estate trustees outlining the parents’ wishes regarding specific aspects of the child(ren)’s care or upbringing. Although such letters or memoranda are not binding, they help the custodian and the estate trustee to reach the decisions the parents would have made or wanted had they survived to raise their child(ren) themselves.
Don’t do anything before fully understanding your rights and obligations. Contact the lawyers at Levy Zavet PC (Levy Zavet) in Toronto, Ontario for more information about trusts, estate administration and estate planning, and for all of your personal and business legal needs.