A will that leaves part of an estate to a minor beneficiary often contains a clause that creates a trust for that child until he or she reaches a set age. The executor of the will may be appointed as trustee or the will-maker may have appointed a separate trustee to administer the trust. In BC, the age of majority is 19 however the terms of the will can direct the trustee to hold property on behalf of a beneficiary until any set age.
There are some important things to consider when setting up a trust for a minor beneficiary. Section 15.1 of the Trustee Act states:
15.1 (1) A trustee may invest property in any form of property or security in which a prudent investor might invest, including a security issued by an investment fund as defined in the Securities Act.
(2) Subsection (1) does not authorize a trustee to invest in a manner that is inconsistent with the trust.
(3) Without limiting subsection (1), a trustee may invest trust property in a common trust fund managed by a trust company, whether or not the trust company is a co-trustee.
During the administration of the trust for the minor, the trustee may be authorized to encroach on the income and/or capital of the trust for the benefit of the child. This could be to pay for education, health care costs or any other expense at the discretion of the trustee. The trustee must keep a detailed record of all transactions and provide a final accounting to the beneficiary for approval before releasing the funds and terminating the trust.
Deborah A. Todd