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 trustee for minor beneficiary 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. 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, the trustee may be authorized to encroach upon the income and/or capital of that trust for the benefit of the child. 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.
Section 99(1) of the Trustee Act refers to the passing of accounts before the court and states:
99 (1) Unless his or her accounts are approved and consented to in writing by all beneficiaries, or the court otherwise orders, an executor, administrator, trustee under a will and judicial trustee must, within 2 years from the date of the grant of probate or grant of administration or within 2 years from the date of his or her appointment, and every other trustee may at any time obtain from the court an order for passing his or her first accounts, and he or she must pass his or her subsequent accounts at the times the court directs.
In order to approve the accounts, a beneficiary must be sui juris, meaning a capable adult, so when there is a minor beneficiary, the accounts cannot be consented to in writing and must be passed before the court.
Consulting a an investment advisor can be very helpful when setting up and managing a trust account for a minor beneficiary and a lawyer can assist in obtaining an order from the court for the passing of accounts.
