Probate With Minor Beneficiaries: Children as Heirs in Canadian Estates

A Halifax executor administering her late brother's $620,000 estate discovered in week three of administration that the will, drafted by her brother online without legal review, left "everything to my children equally" — with no further direction. The children were 9 and 14. The Halifax bank holding the estate funds would not release them. The provincial public guardian's office, when consulted, explained that absent a testamentary trust in the will, the children's shares would come to that office to hold until each child reached 19, with the office's standard fee schedule applying. The executor — the children's aunt, named by her brother as both executor and personal guardian for the children — found herself unable to spend any of the funds on the children's day-to-day expenses without court approval.

That scenario plays out across Canada more than estate planners realize. This article walks through what happens when minors are beneficiaries of a Canadian estate, what the trust and public-guardian routes look like in practice, and what executors and parents writing wills should plan around.

The legal foundation: minors cannot receive directly #

Across all common-law provinces, a minor cannot legally receive and hold estate assets in their own name.

Where the will leaves assets to a minor, the assets must be held by someone for the child's benefit until the child reaches the age of entitlement. Two structures are common: a testamentary trust written into the will, or, by default where the will is silent, the provincial public guardian and trustee.

The testamentary trust path #

A well-drafted will leaving assets to a minor includes a testamentary trust structure. The trust holds the assets, with a named trustee managing them, until the child reaches the specified age — often 21, 25, or older — at which point the principal distributes.

The trust provisions typically address:

• Trustee identity. Often the executor, sometimes a different person, sometimes a corporate trustee. The trustee's role overlaps with but is not identical to the executor's role: the executor administers the estate to its conclusion, while the trustee continues until the trust ends.
• Age of distribution. Commonly 25 in modern wills, but anywhere from age of majority to 35 or beyond. Some wills stage the distribution (one-third at 25, one-third at 30, one-third at 35) to give the beneficiary time to develop financial maturity.
• Trustee powers during the trust. Discretion to make distributions for the child's benefit — typically education, health, maintenance, and advancement in life.^[2] Sometimes broader, including discretion to make outright gifts of capital at the trustee's judgment.
• Successor trustee. If the named trustee dies, resigns, or becomes incapable during the trust's life (which could span 15 years or more for a young minor), a successor needs to be named.

The trustee files annual T3 trust returns under the Income Tax Act^[5] reporting the trust's income. Income that is paid out to the minor or used for the minor's benefit is generally taxed in the minor's hands (typically at low rates); income retained in the trust is taxed at the trust's top marginal rate.

Three observations on testamentary trusts for minors. First, the tax advantage of testamentary trusts was substantially curtailed in the 2016 amendments — graduated rate treatment is now generally limited to the Graduated Rate Estate (first 36 months after death) and Qualified Disability Trusts.^[5] The current rationale for a minor's trust is mostly about control and protection, not tax savings. Second, the trustee's annual administration cost (T3 preparation, investment management, periodic accountings) typically runs $1,500 to $5,000 per year depending on complexity. Third, on long-duration trusts (15-25 years), it pays to think carefully about who the successor trustees will be — the originally named trustee may not be available 20 years out.

The public guardian path #

Where the will is silent on a trust structure, or where there is no will and the intestacy formula directs assets to a minor, the provincial public guardian and trustee generally takes over.

The public guardian and trustee is a government office^[3][4] that holds and invests funds on behalf of minors (and other vulnerable persons). The funds are invested in a conservative pooled investment, with returns paid out at age of majority less the office's administrative fees.

Three things to know about the public-guardian route.

First, the investment policy is conservative — appropriate for capital preservation, but unlikely to outpace inflation over a 15-year holding period. For a child inheriting a substantial amount young, the difference between the public-guardian return and a properly invested testamentary trust can be material over time.

Second, the administrative fees are real. Each province's public guardian schedule differs, but typical fees run 0.5 to 1.5 percent of the funds held annually, plus per-transaction charges. On large estates, the cumulative fee can exceed what a private trustee would have charged.

Third, the public guardian's discretion to make pre-majority distributions is limited and process-heavy. Where the child needs funds for school, medical expenses, or other major items before age of majority, the parent or guardian generally needs to apply to the office for release of funds — a slow, paperwork-heavy process. A privately drafted testamentary trust gives the trustee broad discretion that the public guardian cannot match.

For most Canadian families with minor children, the testamentary trust route is materially better. The cost of having a will drafted with an appropriate trust provision is modest, and it preserves family control over the funds during the holding period.

What the executor does in the meantime #

During the administration of an estate with minor beneficiaries, the executor's responsibilities have several specific overlays.

Identify the minor's share immediately. Calculate the minor's portion of the estate based on the will or intestacy formula and segregate the funds in the estate account.

Open a trust account, if a trust is contemplated. Once probate has been granted and the assets identified, open a dedicated estate trust account for the minor's share. The account is held in the trustee's name as trustee for the named minor.

Make immediate-need distributions where authorized. If the will gives the trustee authority to make distributions for the child's benefit before final transfer, the executor (in trustee capacity) can pay school fees, medical expenses, or other authorized items from the trust account during administration.

Coordinate with the personal guardian. Where the will also names a personal guardian for the children (a different role from the property trustee), the trustee and personal guardian often need to coordinate on day-to-day expenses. Some wills name the same person; others split the roles deliberately for checks and balances.

Plan distributions around tax efficiency. Distributions to the minor for their benefit are taxed in the minor's hands at low marginal rates. Retained trust income is taxed at the trust's top rate. Where appropriate, the trustee can pay out distributions to minimize the trust-level tax burden.

Where the will fails minor beneficiaries #

The common failure modes worth flagging.

"Equal shares to my children" without a trust. As in the opening scenario — the children inherit but cannot receive directly, so the public guardian holds, and the executor and personal guardian lose the discretion they would have had under a trust.

Trust ending too early. A trust that pays out at age 18 or 19 (the bare age of majority) gives a young adult full access to potentially substantial funds at an age where many people are not equipped to manage them well. Modern Canadian estate planning typically pushes the distribution age out — 25, 30, or staged across multiple ages.

No successor trustee. A long-duration trust without a successor trustee provision creates a problem when the originally named trustee becomes unable to serve. Wills should name a clear successor and ideally a successor's successor.

Insurance proceeds without designation. Life insurance and registered accounts often have direct beneficiary designations that override the will. Where a minor is named directly on the policy or registered account, the proceeds go to the minor without the will's trust structure applying — generally diverting them to the public guardian. Naming the trustee of a testamentary trust as the policy or account beneficiary (or naming a separate inter vivos trust) keeps the funds inside the planned structure.

Personal guardian and property trustee mismatched. Naming Aunt A as personal guardian (who lives with the children) and Uncle B as property trustee (who lives far away and has no day-to-day contact) can create coordination friction. Aligning the two — or building deliberate checks-and-balances if separation is intended — is part of the drafting decision.

What this means for parents writing wills #

If you have minor children and are preparing a will, three priorities.

Include a testamentary trust for the children's share. Specify the age of distribution (consider 25 or older for substantial sums), the trustee's discretion to make benefit distributions in the meantime, and the successor trustee. The cost of building this into the will at drafting is minimal; the cost of not having it is real.

Coordinate with beneficiary designations. Confirm that life insurance, RRSPs, TFSAs, and pension survivor benefits flow into the planned structure — either to the surviving spouse or, where applicable, to the trustee of the testamentary trust. Direct designations to minors are the easiest way to undermine an otherwise well-planned will.

Name a personal guardian and a property trustee — and think about whether they should be the same person or different. The personal guardian raises the children day to day; the property trustee manages the funds. The choices interact with each other.

For related reading, see our pillar on what does an executor do in Canada, our companions on naming a minor as beneficiary without a trust and how to choose a guardian for your children, and our guide on testamentary trusts in a Canadian will. The Will Creator at It's Simple Will walks through these decisions in plain language and builds the trust provisions into the document automatically when minor children are named.