Parents in Surrey and across British Columbia often want to make sure that, if they die while their children are young, the children's inheritance will be managed carefully. A testamentary trust is one way a will can provide for that. It is a trust created under a will and funded after the will-maker dies, subject to the terms of the will and the estate administration process.
A trust is not a substitute for a complete estate plan. The terms need to fit the family's circumstances, the assets involved, the people who may be asked to administer them, and the children's needs over time. This overview explains common planning questions. The right structure depends on the facts and current law.
What is a testamentary trust?
A testamentary trust is established by a will and takes effect on death. The will names a trustee, identifies the property or share to be held, and sets out how the trustee is to manage and distribute it for the beneficiary. The trustee's role is different from the executor's estate-administration role, although the same person may be appointed to both roles if appropriate.
For a child who is not yet ready to manage a substantial inheritance, the will can direct that the child's share be held in trust. The trustee may be authorized to use funds for the child's benefit, according to the terms drafted into the will, and distribute remaining property at specified ages or milestones. The wording matters: a trustee should not be left to guess what the will-maker intended.
Why parents consider a trust for a minor child
A trust can provide a management framework instead of leaving a young beneficiary to receive a large sum outright at an age when they may not be prepared to manage it. Depending on the will's terms, it can allow funds to be applied to needs such as education, health, maintenance, or other stated purposes, while preserving the balance for later distribution.
It can also set out a planned timeline. Some parents choose one distribution age; others consider staged distributions. There is no universally right age or formula. A plan should account for the child's maturity, the size and nature of the estate, and whether there are other resources available to support them.
Choosing a trustee
The trustee will have significant responsibilities. They may need to safeguard and invest trust property, keep clear records, make decisions under the will, communicate with beneficiaries, and obtain professional help when needed. Consider whether a proposed trustee is organized, trustworthy, available for the long term, and comfortable managing money and family dynamics.
Parents may consider naming an alternate trustee in case the first choice cannot or will not act. They should also consider whether the chosen trustee can work constructively with the child's caregiver. A trustee does not automatically have the same role as a guardian or day-to-day caregiver. The will should make the intended roles clear and avoid creating unnecessary conflict.
Trustee powers and instructions
The will should give the trustee workable instructions. It may address what kinds of expenses can be paid for the child, how the trustee should consider requests, whether income and capital can be used, and when the trust ends. Clear drafting can reduce uncertainty, but overly rigid directions may not adapt well if circumstances change.
Parents should think through practical questions: Can the trustee make payments directly to a school or service provider? Can funds be used for an urgent need? What happens if a child has a disability or needs ongoing support? What happens if the child dies before receiving all of the trust property? These are examples of decisions to discuss when preparing a will, not a checklist that fits every family.
Guardianship is a separate planning issue
Financial arrangements and care arrangements are related, but they are not the same. Naming a trustee to manage property does not, by itself, make that person the child's day-to-day caregiver. Parents should separately consider who they would want to care for their children and how that choice should be documented under the applicable BC rules. The proposed caregiver should be consulted rather than surprised by the appointment.
Families should also consider whether the person they choose to care for a child should manage the child's inheritance, or whether separating those roles would better suit their circumstances. There is no single answer. The choice should reflect the individuals involved and the plan's practical operation.
Tax and administration questions
A testamentary trust can involve tax filings, investment decisions, accounting, and ongoing administration. The treatment of trust income and distributions can depend on the structure and the rules in force when the trust is established and administered. Do not assume that a trust automatically produces a tax advantage. A lawyer can help draft and coordinate the will provisions, while an accountant or tax professional can address tax questions relevant to the family's situation.
It is also useful to consider the cost and effort of administration. A modest estate may call for a different approach from a larger or more complex one. The trustee should understand the responsibilities before accepting the appointment, and the will should address compensation and expenses in a way that is clear and appropriate.
Review the plan as your family changes
A will made when a child is a toddler may no longer reflect the family's needs when that child is a teenager. Review the plan after major events such as a birth, separation, remarriage, a significant change in assets, a move, or a change in the availability of a chosen trustee or caregiver. Keep current contact details for the people named in the will and let them know where the signed document is stored.
Parents may also want to coordinate trust provisions with beneficiary designations, jointly held property, insurance, and other assets. Some assets may pass outside the estate depending on how they are owned or designated, so a will should be considered as part of the overall plan rather than in isolation. For related information, see our Wills and Estates services in Surrey and our article on estate planning basics for BC residents.
Planning a will in Surrey or Guildford
When discussing a testamentary trust, bring a general picture of your assets, the ages and needs of your children, your preferred caregiver and trustee candidates, and any concerns about timing or family circumstances. You do not need to have every answer before starting. The planning process can help identify decisions that need more thought and ensure the will's terms are understandable and workable.
Law Boutique assists clients in Surrey and the Lower Mainland with wills and estate planning. To discuss preparing or reviewing your plan, book a consultation.