So what happens to the money or property if it's left to someone who is a minor? It's held in trust for the minor until he or she reaches the age of majority.
This is a situation in which the existence of a strong Will is essential. The Will can control at what age the child inherits the money, who holds it for them in the meantime, and whether any of it can be used for the child before he or she comes of age. Most parents I've spoken to over the years say they'd like to put some controls on the inheritance for children to make sure that the children aren't taken advantage of by anyone, and to help the child maximize the benefit of the inheritance. They can achieve that using their Wills.
If there is no Will in place and a minor is a beneficiary of the person's estate, the money will most likely be held for the child by the Office of the Public Trustee. The full amount of the inheritance (plus interest of course) will be paid to the child on his or her 18th (or 19th) birthday.
In a Will, the terms of the trust are decided by the testator, allowing parents to choose an age later than 18 or 19 if that seems appropriate, and to choose who will look after the money. The parent can also direct that funds from the trust be used to pay for education, medical expenses or general living expenses.
Personal or household items that are left to a child are usually held by the executor/trustee of the Will. Depending on the item, the trustee might decide that the child can have or use the item before reaching the age of majority, if that would be of benefit to the child. For example, you might not want to give valuable jewelry to a 10-year-old, but you might be ok with putting up the framed photos the child inherited.
A minor's name cannot be added to the title of real estate. Again, that has to be held in trust either by the executor/trustee or another person specifically named in the Will.
If you only have a small amount of money, like $30,000, how can you leave it to your children to inherit upon age of consent without being spent by your estranged spouse? What would be the most cost effective yet safe way to do that?
ReplyDeleteThis really depends on what kind of asset you are talking about. I'm assuming that you are going to make a will, which is great. Name an executor who is not your ex, and whom you can trust to follow the will and carry out your wishes.
DeleteIf you have any assets that are going to pass to your kids through your estate (money, car, insurance) consider putting in a clause that specifically prohibits your ex from acting as trustee of your kids' inheritance.
When money is left in trust, you can choose whether your kids (or an adult taking care of them) would have access to the money before the kids come of age. This is called encroachment. You could say in your will that there is to be no encroachment. That would make sure that nobody could access the funds before the kids come of age, but of course it also means the money is not available if the kids need something like braces or college money.
If the money is in cash, have you thought about setting up separate "ITF" bank accounts? ITF means In Trust For. These are not real trusts, but are accounts which you set up now at the bank with your kids' names on them. If you have passed away, as each child turns the age of majority, he or she would receive the funds. This might not be workable if you actually need the money yourself.
Lynne
Thank you for your reply Lynne,
ReplyDeleteIt would be insurance money from my extended health through work. To be honest, I don't really know anyone I trust enough that I think will survive long enough to see the kids come of age. Could the executor create the ITF account if he is named in the will as the executor? Would a simple notarized will be enough to grant that power to a non-family member if my ex tried to fight and get the money?
Notarized wills are only used in Quebec. The rest of Canada has a different (common law) legal system. Yes, your executor can set up accounts for the children.
DeleteLynne