How Will Your Guardian Financially Care for Your Child?

The short answer: In Ontario, naming a guardian for your child in your will doesn't automatically provide the money to raise them. You can use your will, life insurance, and possibly a trust to set out how your assets should be used for your child's care, and it's important to discuss expectations with your chosen guardian.

On our blog, we've talked about the kinds of things you should consider when choosing a guardian for your minor child. The next question is one many parents overlook: how will that guardian financially care for your child?

What financial questions should you ask when choosing a guardian?

Finances can be a real concern for your guardian. Here are questions to put some thought into when planning for your child's future:

• How will your chosen guardian financially provide for your child?
• Do you have life insurance?
• What assets or liabilities do you have that will affect the care your guardian can provide?
• Do you have assets that will be left to cover expenses for your child?
• Will those assets be left directly to the guardian, or held in a trust for a lawyer or financial advisor to manage?

Can you set out in your will how your assets are used for your child?

Yes. Within your will, you have the opportunity to stipulate how you'd like your assets to be used to financially care for your child. For example:

• How much should be used for your child's post-secondary education?
• Is money being left specifically for your child when they turn a certain age?
• Should assets go directly to the guardian, or be held in a trust managed by someone you choose, such as a lawyer or financial advisor?

Money left to a minor child raises important questions about who manages it and when your child receives it. A lawyer can explain your options, including whether a trust created in your will, sometimes called a testamentary trust, makes sense for your family.

What if you don't have enough assets to provide for your child?

If you don't have enough assets in place to secure your child's foreseeable future, ask yourself how much you estimate your chosen guardian will need to financially care for your child.

This isn't necessarily laid out in your will, but it should be discussed with your chosen guardian before you pass. Life insurance may also help fill a gap. Ask your lawyer and financial professionals what's right for your situation.

How do life insurance and beneficiary designations fit in?

Assets with a named beneficiary, such as life insurance and registered accounts, generally pass outside your will. That means your will and your beneficiary designations need to work together, so review both when you're planning for your child.

Should you revisit your guardianship plan?

Yes. Your guardianship clause is not set in stone. Your financial situation can change, and so can your wishes about who you'd like to care for your child if you pass away. It's important to revisit the wishes set out in your will every few years.

How can you plan for your guardian's financial support?

1. Choose your guardian first, and talk with them about what caring for your child would involve.
2. List your assets, liabilities, and life insurance so you can see what would be available for your child.
3. Decide how you want money used, for example for post-secondary education or at a certain age.
4. Decide whether assets go directly to the guardian or into a trust.
5. Estimate any shortfall and discuss it with your guardian before you pass.
6. Review your will and beneficiary designations every few years, and after major life changes.

Contact

Brian McMurter is a real estate and estate planning lawyer at McMurter & Associates in Whitby, helping Durham Region, Ontario residents with estate planning and real estate law. 

Contact McMurter & Associates Monday to Friday, 9 a.m. to 5 p.m. at info@mcmurter.com or call 1 800 756 7138 or 905 666 9200 to schedule a consultation.

Disclaimer: This article provides general information about Ontario law and is not a substitute for legal advice. Please speak with a lawyer about your specific circumstances before making decisions about real estate law and estate planning.