Under Ontario law, a child cannot receive money owed to them (such as from an inheritance) until reaching the age of majority. Moreover, a parent cannot receive money owed to a child without obtaining a court order appointing the parent as the child’s guardian for property. However, s. 51(1.1) of the Children’s Law Reform Act (“CLRA”) provides a narrow exception to that law, allowing an amount of $10,000 or less to be paid directly to:
(a) the child, if the child has a legal obligation to support another person;
(b) a parent with whom the child resides; or
(c) a person who has lawful custody of the child.
On February 16, 2021, the Ontario Government introduced Bill 245, the Accelerating Access to Justice Act, 2021, which would increase the $10,000 amount by regulation to $35,000.
In addition, Bill 245 would also amend s.51(2) of the CLRA to provide that money payable to a child under a judgment or order of a court, or on an intestacy, can be paid to a parent or person with custody of the child if the amount is less than the prescribed maximum ($35,000). Currently, money payable under a judgment or order of a court is expressly excluded from payment to a parent or person with custody, regardless of the amount.
This is a positive development permitting a higher amount to be paid out directly to the child/parent/person with lawful custody without requiring the person seeking the payment to incur the costs of obtaining a guardianship appointment, which may exceed the value of the property owed to the child. As such, costs for parents are reduced.
However, a parent or person with lawful custody of a child who receives such funds on behalf of a child should bear in mind that the CLRA imposes the same obligations upon them as if they were their child’s court-appointed guardian for property (s.54(4)). As such, they may be called upon to account for how they have managed the child’s property in the same manner as a trustee (s.52), and must transfer the property to the child when that child turns 18 (s.53).
