Estate litigation lawyer, Leanne Kuchynski, was recently published in LexisNexis’ Canadian Family Law Matters Newsletter for her blog post reviewing a case that discusses the factors that the Court will consider when making a determination regarding whether a parent will be appointed as Guardian of Property over their child’s funds or whether the funds will be paid into Court. Read the full blog post below.
In Santella v Bruneau (Litigation Guardian of), 2020 ONSC 2937, Justice Corthorn discussed factors that the Court will consider when making a determination regarding whether a parent will be appointed as Guardian of Property of their child’s funds or whether the funds will be paid into Court until the child turns 18 years of age.
John Bruneau (the “deceased”) passed away intestate. He left behind his wife, Palmina Santella (“Ms. Santella”), and his son, Michael Bruneau (“Michael”), who was a minor at the time of this Application. Michael was represented by the Office of the Children’s Lawyer in this proceeding.
Ms. Santella and Michael were the only beneficiaries of the Estate of John Bruneau (the “Estate”). The only asset of the Estate that Ms. Santella and Michael were to share in was a Condominium. A Guardian of Property was required to be appointed for Michael, in order for the Condominium to be sold.
Ms. Santella, who is Michael’s mother, sought to be appointed as Michael’s Guardian of Property for the purposes of the sale of the Condominium and to manage his property until he reached the age of 18 years. The Office of the Children’s Lawyer and Ms. Santella both agreed that Ms. Santella should be appointed as Michael’s Guardian of Property for the sale of the Condominium; however, the parties disagreed regarding Ms. Santella managing Michael’s inheritance funds following the sale.
Ms. Santella wished to manage Michael’s inheritance funds during his minority. She proposed that she would invest his inheritance funds into GICs and may invest some of his funds into a Registered Education Savings Plan (“RESP”). Further, the inheritance funds were to be invested during his minority and the funds were not to be encroached upon for any expenses.
The Office of the Children’s Lawyer took the position that the inheritance funds ought to be paid to the Accountant of the Superior Court of Justice (the “Accountant”) until Michael turned the age of 18 years and therefore, a Guardian of Property was not required. In addition, the Office of the Children’s Lawyer opposed any portion of Michael’s funds being placed into a RESP, as the funds placed in the RESP were at risk of not being available to Michael once he turned 18 years due to the past treatment by the Court of RESPs being declared as assets of the adult subscriber and not assets of the child, who the RESP was intended to benefit, in family law and bankruptcy proceedings.
Section 36(6) of the Trustee Act states that if a minor is entitled to funds, the trustee may pay the funds to the Accountant to the credit of the minor. Section 47 of the Children’s Law Reform Act (“CLRA”) provides that the Court can appoint a Guardian of Property to manage the minor’s funds until the minor attains the age of 18 years.
If a Guardian of Property is appointed, the Guardian is required to post a bond unless the Court orders otherwise in the case of a parent applying (Section 55 of the CLRA). The Guardian of Property is also required to submit accounts to the Office of the Children’s Lawyer and may also have to pass their accounts formally (Section 52 of the CLRA).
If the funds are paid into Court, the funds are managed and invested by the Accountant. The Accountant charges fees for their management of the minor’s funds. The Accountant is not required to post a bond and further, is not required to pass their accounts.
The Court ultimately agreed with the position taken by the Office of the Children’s Lawyer and ordered that the inheritance funds be paid into Court.
Justice Corthorn stated that her decision was no way reflective of Ms. Santella’s ability to manage Michael’s property. Rather, her Honour was not persuaded that this was a case where a security bond ought to be dispensed with, as there was no evidence before her to support that the bond be dispensed with and further the inheritance was a six-figure amount. In addition, if the funds were paid into Court, the submission of draft accounts and the commencement of a formal passing of accounts by the Guardian of Property would not be required, thereby saving Michael the expense of legal costs. Her Honour also considered that Ms. Santella was a single parent and there was uncertainty as to whether there would be someone who could take over the guardianship, in the event Ms. Santella was appointed as Guardian and then subsequently could no longer continue.
Justice Corthorn further found that there was a risk that the inheritance funds invested in the RESP would not be available to Michael when he turned 18 years, given the conflicting law regarding the ownership of a RESP. Further, the payment into Court of Michael’s funds did not prevent Ms. Santella from investing her own funds into a RESP for Michael.
The COVID-19 pandemic also had an impact on Justice Corthorn’s decision to have the funds paid into Court. The uncertainty regarding the impact of the pandemic on the economy, interest rates, and the return of investments, contributed to the finding that a payment of funds into Court was in Michael’s best interests. This case suggests that a parent applying to become Guardian of Property will need to persuade the Court that their appointment as Guardian of Property to manage their child’s funds is more beneficial to the child versus having the funds paid into Court. The Guardian’s investment plan and the costs of the guardianship appear to be considerations that will factor in the Court’s decision. Further, the Court, in this case, suggests that investing a minor’s funds in a RESP is a risk and as such, a RESP may not be a proper investment of the minor’s funds by a parent.