Naming a Minor as Beneficiary in a Canadian Will Without a Trust

A 39-year-old single mother in Winnipeg dies in a car accident, leaving an $800,000 estate — her home, her RRSP, and a small life insurance policy — to her seven-year-old son. Her will, drafted from a free template downloaded years earlier, says simply, "I leave my entire estate to my son Marcus." It says nothing about a trust. Within three months of probate, Manitoba's Public Guardian and Trustee has taken control of approximately $710,000 (after debts and taxes), placed it in a conservative balanced investment portfolio, and confirmed in writing that the funds will be released to Marcus on his 18th birthday. Marcus is now nine. He will receive roughly $1.1 million dollars at 18, in one cheque, without any structure or staged release. The PGT charges roughly 0.6% per year for its services. His grandparents, who are raising him, cannot direct any of the funds without applying to court each time they need to spend money on Marcus's expenses.

That outcome — a child receiving a large lump sum at the youngest possible moment — is the default in every Canadian province when a will leaves money to a minor without including a testamentary trust.

Why a minor cannot just receive money #

The age of majority is 18 in roughly half of Canadian provinces and 19 in the other half. Until that birthday, a minor cannot legally hold or manage significant property — contracts they enter into are generally voidable at their option (with narrow exceptions such as contracts for necessaries), they cannot open many investment accounts, and they cannot direct a financial institution to hold or move funds.

Provincial law steps in to fill the gap. When a will leaves a meaningful sum directly to a minor, the funds are generally paid to the provincial Public Guardian and Trustee (or equivalent office), who holds, invests, and disburses the funds on the minor's behalf until they reach the age of majority.^[2][4]

The PGT performs the function competently and conservatively, but it has constraints:

It is a government office with limited flexibility. Investment policy is conservative — typically a balanced portfolio with low volatility — which generally underperforms what a private trustee could achieve over a 15-year horizon.

It charges fees. Ontario's Office of the Children's Lawyer, BC's PGT, and Alberta's Public Trustee each charge management fees in the range of 0.4% to 0.9% per year, plus transaction fees.

It releases everything at age of majority. The day the minor turns 18 (or 19), the entire balance is paid out, in cash. There is no statutory mechanism to extend or stage the distribution beyond that date.

It is not flexible day-to-day. Spending on the minor's expenses — school fees, sports, summer camp, a car at 16 — requires the guardian of the person (typically the surviving parent) to apply for each disbursement, with paperwork, sometimes with a court appearance.

For a small inheritance (a few thousand dollars), the PGT route is harmless. For an inheritance large enough to materially affect the minor's life trajectory, it is rarely the result anyone — testator, surviving parent, or eventually the child — would have chosen.

The "in trust for" trap #

The most common DIY drafting mistake on this issue is leaving money to a parent or other adult "in trust for" the minor, without further trust language.

"I leave $200,000 to my sister Janice in trust for my daughter Emily."

This appears to create a trust. In practice, courts interpret these clauses inconsistently. In many cases — particularly where the will offers no further detail about the trust terms — the clause is read as either an outright gift to Janice (with no enforceable obligation to Emily) or as a precatory expression of wishes (a non-binding suggestion that Janice "should" use the money for Emily).

The fix is a properly structured testamentary trust clause that:

Names a specific trustee (and at least one alternate). Identifies the minor beneficiary clearly. Sets out the trust terms — purposes for which trust funds can be used, distribution ages, what happens if the minor dies before distribution. Vests the funds in the trustee subject to the trust, not as the trustee's personal property. Specifies the trustee's powers (investment, encroachment for the minor's benefit, taking professional advice, etc.).

A few extra paragraphs of drafting create an enforceable trust the courts can interpret and the named trustee can administer. A throwaway "in trust for" phrase does not.

What a testamentary trust clause typically does #

A standard testamentary trust for a minor accomplishes three things:

It moves the funds outside PGT control. The named trustee — usually a family member, sometimes a corporate trustee for larger amounts — holds the funds privately. No court application is required for routine spending; the trustee administers the trust under the will's terms.

It stages the distribution. A common pattern is one-third at 21, one-third at 25, balance at 30. Another common pattern keeps the principal in trust indefinitely with income paid out from age of majority. The testator chooses the staging that fits their views on when the child should have control.

It empowers the trustee for the child's day-to-day needs. A well-drafted trust gives the trustee broad discretion to encroach on capital for the minor's "health, education, maintenance, and support" — the standard HEMS phrasing — without separate court approval for each expense.

The same trust clause can also handle the contingency of a child predeceasing the testator without descendants of their own; the will specifies a gift-over to other named beneficiaries.

Choosing the trustee #

The trustee of the testamentary trust does not have to be the same person as the guardian of the minor's person (the person raising the child). Many families intentionally split the two roles:

The guardian of the person is named under the will to raise the child if both parents die. This person handles day-to-day parenting, schooling, residence.

The trustee of the property is named separately to manage the trust funds. This person makes investment decisions, approves disbursements, files trust tax returns.

Splitting the roles introduces a check on both sides — the guardian cannot freely access trust funds, the trustee has visibility into how trust money is being requested. It also matches each role to the right skill set; the loving aunt who is the best parent may not be the best money manager, and vice versa.

For estates above roughly $500,000 destined for minor beneficiaries, a co-trustee structure — one family trustee plus one professional/corporate co-trustee — is increasingly common. The corporate trustee handles compliance and investment; the family trustee handles judgment calls about distribution.

The tax layer #

Testamentary trusts in Canada used to be taxed at graduated rates, mirroring individual taxation. Since January 1, 2016, most testamentary trusts have been taxed at the top marginal rate — a flat 33% federally plus the top provincial rate — with two exceptions:

Graduated rate estate (GRE) status — available for the first 36 months after death, allowing the estate to use graduated rates during that wind-up window.

Qualified disability trust (QDT) status — available where the trust is for a beneficiary qualifying for the disability tax credit.

Beyond those exceptions, the trust pays top-rate tax on undistributed income. Most trustees therefore distribute income out to the beneficiary annually (where the beneficiary is in a lower bracket) to use the beneficiary's marginal rate. With minor beneficiaries this is complicated by attribution rules — income paid to a minor from a testamentary trust set up by a parent is generally taxed in the minor's hands at the minor's rate, but income from non-parental sources may face the kiddie tax (Tax on Split Income, or TOSI).

These rules are reason enough to involve an accountant in larger trust structures from the start.

What happens when the trust ends #

When the trust's terms call for distribution — at age 25, age 30, or whatever the will specifies — the trustee transfers the remaining assets to the beneficiary, files a final trust return, and the trust dissolves. The beneficiary receives the assets at the trust's cost base under section 107 of the Income Tax Act (a tax-deferred rollover), so no capital gain is triggered on the distribution itself.

If the trust holds appreciated assets the beneficiary plans to sell, the beneficiary inherits the unrealized gain and pays the tax when they sell. This is normally the desired result — the trust did not pay tax on the appreciation during the trust's life, and the beneficiary pays at their own marginal rate when they sell.

What we focus on at It's Simple Will #

It's Simple Will walks parents through the question of whether minor beneficiaries are likely (any children under the age of majority at the time of signing) and produces a properly structured testamentary trust clause when needed. The default staging matches what most Canadian estate practitioners recommend — staged distribution at 21, 25, and 30 — with the option to override.

For the foundational rules on Canadian wills, see our pillar on how to write a will in Canada. For the related guardian-of-the-person question, see how to choose a guardian for your children and naming alternate guardians. For the broader trust structure, see testamentary trusts in a Canadian will.