New Family Law Act Child's Property Provisions

In British Columbia, minors (those under the age of 19) do not have full legal capacity to contract, give receipts for money or other property transferred to them, or dispose of their property. Accordingly, when a minor is entitled to receive substantial money, that money must be held for them by either the Public Guardian and Trustee of British Columbia, or a private trustee.

Well drafted wills and trusts contain clauses stating that if a minor inherits part of the estate, the executor and trustee may hold the funds until the minor attains 19, and authorize the executor or trustee to make payments for the benefit of the minor including payments to the minor’s guardian in the meantime.

But in other cases in which a minor is entitled to funds, such as the settlement of a car accident, the funds are paid to the Public Guardian and Trustee of British Columbia to manage, unless the Supreme Court of British Columbia appoints someone else, such as a parent as trustee. The Public Guardian and Trustee charges fairly high fees for managing funds for minors and others, and in the case of smaller amounts, the cost of an application to court for someone else to be appointed trustee may be disproportionately high.

The new Family Law Act, with will come in to force on March 18, 2013, has a provision, section 178, allowing a minor’s guardian to hold funds or other property for a minor if the value of the funds or property is relatively small. The funds or other property may also be delivered directly to the minor if the minor has a duty to support another person. The value is not set in the Act, but will be fixed by Regulation, and the new Regulation sets the maximum amount at $10,000, which reflects the value of the property at the time it is delivered. The guardian must deliver the funds or property and provide an accounting to the minor when he or she attains the age of 19.

Section 179 provides that the Supreme Court of British Columbia may appoint a trustee to manage funds for a minor, It says:

Appointment of trustee by Supreme Court
179  (1) Subject to subsection (2), the Supreme Court on application may appoint one or more persons as trustees over

(a) particular property to which the child is entitled, including any property derived from the property or from the disposition of the property, or

(b) all property to which the child is entitled at the time the order is made and to which the child becomes entitled while the order is in effect, except property

(i) identified in the order, or
(ii) over which a trustee already has authority.

(2) The Supreme Court may appoint a trustee only if satisfied that it is in the best interests of the child to do so, on consideration of all of the following:

(a) the apparent ability of the proposed trustee to administer the property;
(b) the merits of the proposed trustee's plan for administering the property;
(c) the views of the child, unless it would be inappropriate to consider them;
(d) the personal relationship between the proposed trustee and the child;
(e) the wishes of the child's guardians;
(f) the written comments of the Public Guardian and Trustee;
(g) the potential benefits and risks of appointing the proposed trustee to administer the property compared to other available options for administering the property;
(h) if the Supreme Court is considering making an order under subsection (1) (b), that the interests of the child are likely better served by an order made under that subsection than by an order made under subsection (1) (a).

(3) An order made under this section to appoint a trustee may do one or more of the following:

(a) require the trustee to deliver the trustee's accounts at specified intervals for the examination and approval of the court;
(b) limit the duration of the trusteeship;
(c) specify or limit the types of investment in which the trustee may invest the property;
(d) provide for compensation of the trustee including, without limitation, setting rates and specifying when the compensation may be taken;
(e) require the trustee to give security in any form the court directs;
(f) make any other order the court considers appropriate.
(4) Except as provided for in an order made under this section, the Trustee Act applies to the trustee and the trust.

You will still be able to appoint a trustee to manage a minor’s funds or other property in a will or trust document.

In other cases, the Public Guardian and Trustee will act as trustee of a minor’s funds or other property.

I like the provisions in the new Family Law Act dealing with minors’ property, but think the $10,000 ceiling for a guardian to receive property and act as a trustee for a minor without  a court order is too low. $25,000 would be a more reasonable ceiling.

New Family Law Act and Standby Guardians

The new Family Law Act, Bill 16, has now been passed by the British Columbia Legislature, and has received Royal Assent, but as of the date of this post is not yet in effect.

If you are the guardian of a minor child, there is a provision that will, when it comes into force, allow you to appoint a standby guardian of the child in case because of illness or mental incapacity you become incapable of acting as the child’s guardian.

Section 55 provides as follows:

55 (1) A guardian facing terminal illness or permanent mental incapacity may appoint a person to become, when the conditions set out in the appointment are met, a child's guardian, in addition to the appointing guardian.

(2) An appointment under subsection (1)

(a) must be made in the prescribed form,

(i) signed at its end by the guardian, or the signature at the end must be acknowledged by the guardian as his or hers, in the presence of 2 or more witnesses present at the same time, and
(ii) signed by 2 or more of the witnesses in the presence of the guardian,

(b) must state the conditions that must be met for the appointment to take effect, and
(c) may provide that a designated person certify that a condition referred to in paragraph (b) has been met and that, if such a certification is made, it is conclusive.

(3) For the purposes of subsection (2) (a),

(a) a witness may not be a person appointed to be the child's guardian, and
(b) a reference to the signature of a guardian includes a signature made by another person in the guardian's presence and by the guardian's direction, and the signature may be either the guardian's name or the name of the person signing.

(4) In carrying out his or her parental responsibilities, a guardian appointed under this section must consult with the appointing guardian to the fullest possible extent regarding the care and upbringing of the child.

(5) Unless the appointing guardian, while capable, has revoked the appointment or the appointment provides otherwise, a guardian appointed under this section continues as the child's guardian on the death of the appointing guardian despite any other instrument made by the appointing guardian.

I am concerned about how the first part of this section is worded. Do the words “A guardian facing terminal illness or permanent mental incapacity,” mean you can only make the appointment if you have been diagnosed with an illness or for some other reason anticipate that you will become terminally ill or suffer permanent mental incapacity? I doubt that this is what the Legislature intended. You should be able to appoint a standby guardian incase you become incapacitated without there being an immediate prospect of such incapacity. You may be perfectly healthy, but want to name a standby guardian for your child incase you are incapacitated in a car accident.

This section should be amended by deleting the words “facing terminal illness or permanent mental incapacity.” They either limit the application of the section in an irrational way, or, as is more likely, they don’t add anything to the meaning of the section.

Appointing a Guardian by Will in British Columbia

In British Columbia, a parent may appoint some one in his or her will to act as guardian of the parent’s minor children on the parent’s death. The applicable legislation, section 50 of the Infants Act, RSBC 1996, c. 223, does not authorize anyone other than the child’s parent to appoint a guardian by will. This means that if, for example, a child’s parents are dead, then the child’s sole guardian cannot appoint a subsequent guardian by will in case the first guardian dies.

Where two people, usually the parents, are joint guardians of a child, and one of the joint guardians dies, then the surviving joint guardian becomes the child’s sole guardian

The British Columbia Law Institute, in its March 2004 “Report on Appointing a Guardian and Standby Guardianship," has recommended the following changes to the law:

1. That the testamentary guardianship provisions currently located in the Infants Act be relocated to the Family Relations Act.
2. That a guardian who is not a parent should be able to appoint a person to act as guardian of the child after the appointing guardian’s death.
3. That the Family Relations Act be amended to allow for the appointment of a standby guardian.
4. That the simple form set out in “Form X” be enacted through regulation under the Family Relations Act.

If the recommendations are implemented, a parent or other guardian of a minor could appoint a standby guardian who would become a guardian on certain triggering events such as the physical debilitation, mental incapacity or death of the minor’s sole guardian. Currently, British Columbia legislation does not provide for the appointment of a standby guardian.