Who has the legal authority to manage a child’s estate?
A child’s estate is money or property that is due to a child from something like an inheritance or an insurance payment. Parents and guardians of a child can make personal decisions for a child in areas such as education, medical care, and social activities. However, they may not have the authority to make decisions about the child’s estate. The Guardianship Act, section 17, sets out the rules about who may receive money and property for a child and how to deal with it. For money, the amount matters.
A guardian who acts as a parent to a child is a guardian of the person. Someone who has the legal authority to manage the money and property that is due to a child is a guardian of the estate.
How to deal with an amount of $10,000 or less
A child may receive up to $10,000 without making special arrangements as long as they get no more than $2,000 of the money in any one year. For example, a parent or relative could receive the money and pay the child $2,000 per year for up to five years ($2,000.00 x 5 = $10,000).
Any of the following people may receive up to $10,000 on behalf of a child
Any of these people may write a receipt to show that they have received this money. The receipt will be considered legal in a court.
A parent or guardian who receives money for a child must carry out the responsibilities of a guardian of the estate for the child in these ways
How to deal with an amount over $10,000, or if the person holding less than $10,000 does not want to pay out the money over several years
A parent or guardian may apply to be a guardian of the estate for a child for one of two reasons
The court will appoint a guardian of the estate for the child only if the court believes that this is in the child’s best interest. This person must show both the child and the court that they will administer the child’s property properly. The court is likely to require the guardian to give the court a bond or other form of security. A bond acts like insurance. The bond guarantees that if the guardian improperly administers the estate and the money is lost or stolen, the company will step in and pay the amount due to the child if the guardian of the estate does not.
How to pay a child who works for you
If you hire a child, you may pay the child’s wages directly to them.
What is the role of the Public Trustee in managing the financial estate of a child?
In Nova Scotia the Public Trustee is, by law, the guardian of the estate of every child unless someone else has been appointed to that role by the court.
The money must be paid to the Public Trustee when money or property is due to a child and any of these things is true:
Examples of when money that is due to a child must be paid to the Public Trustee
a child inherits money or property
A child inherits money, land, a house, or some other kind of property. There is no will, or the will does not appoint a trustee for the child’s estate.
a child receives a benefit
a child receives money from a lawsuit
If the Public Trustee agrees, these things happen:
Can the Public Trustee or someone else spend money on behalf of the child from the fund the Public Trustee is holding in trust for the child?
The Public Trustee can spend money only according to the terms of a will or directions of a trust agreement or court order. In many situations, there is no will, trust agreement, or court order. In those situations, the Public Trustee can spend money from the trust fund to look after and educate the child.
In making decisions about whether to spend money from a trust, the Public Trustee will consider the following:
Can I sell or mortgage property that belongs to my child?
You must apply to the Supreme Court if you want to sell or mortgage a child’s property, whether you are a parent, guardian of the person, or trustee. The court must find the sale necessary for one of these reasons:
The court will want to know that the child will get the proper value for any property that you sell or mortgage on their behalf.
Does the Public Trustee provide information to the parent or guardian during the time it is holding trust funds?
At the end of every year, the Public Trustee prepares a statement of all the financial transactions that were made for the account during that 12-month period, and mails it to the parent who has custody of the child or the child’s guardian of the person.
Does the Public Trustee charge fees for its service as trustee?
The Public Trustee is entitled to charge trustee fees. Trustee fees are the following:
These fees are then paid to the Minister of Finance of Nova Scotia. The Department of Finance pays the salaries of all of the staff in the Public Trustee’s Office. The salaries and budget of the Public Trustee’s Office are set by the province.
The Public Trustee is also entitled to be repaid for the cost of any services it pays for on behalf of a child. For example, the Public Trustee would charge the trust fund the amount it cost to have someone prepare the tax return for the trust.
When is a child entitled to receive the money from the trust account?
The Public Trustee will hold the funds until the child turns 19 unless the will or other trust document gives an age that is older than 19.
Shortly before the trust is handed over to a child, the Public Trustee will do three things:
If a child dies before they receive the funds, then the Public Trustee will release the property to the person who is appointed by the Probate Court to be legally responsible for the child’s estate.
What if I have questions about my child’s ability to manage money after their 19th birthday?
The law says that 19 is the age when a child becomes an adult.
The Public Trustee understands that some parents may be concerned about their child receiving a large sum of money on their 19th birthday. However, the law says that your child is entitled to receive any funds that are due to them. The Public Trustee is not allowed to hold back these funds unless there are signs that the child may not have the mental capacity to manage their financial affairs when they reach 19. The Public Trustee cannot hold back your child’s funds simply because the child is not responsible or mature.
You may consider hiring a lawyer or other advisor to talk to a child about options that an adult has for managing the money or property from a trust.
What help can you give to a child who has an intellectual disability and will never be able to manage their affairs?
The Public Trustee will work with you and your child to help plan for the child’s future.
If you believe that your child may never have the mental ability to manage their financial affairs, then you can go to the Supreme Court, as soon as the child turns 19, and ask the court to appoint a legal guardian for the child’s financial estate and property. This is governed by the Incompetent Persons Act.