Leniuk Estate 2016 BCSC 159 held that a guardian for an infant is not permitted to be appointed the trustee to receive and hold in trust on the infant’s behalf all of the property to which the child is entitled to receive in place of the appointed executor and trustee. The application was brought under part 8 of the Family Law act and was opposed by the Public Guardians who successfully argued that the will is paramount and that Part 8 of the Family Law act did not apply.
Guardians not automatically entitled to receive property.
Section 176 FLA– Except as set out in section 178 [delivery of small property], a child’s guardian is not, by reason only of being a guardian,
(a) a trustee of the child’s property, or
(b) entitled to give a valid discharge on receiving property on behalf of the child.
[13] Section 176 provides that a guardian, simply because they are a guardian, is not a trustee of a child’s property. As a result someone else can be trustee of the child’s property. Hence, a trust instrument, such as a will, that states a guardian is to receive a child’s property and is empowered to grant a discharge is not contrary to the section. Indeed s. 176 by its very wording recognizes this as it provides “by reason only of being a guardian”. (Emphasis added)
[14] In my opinion the FLA provisions were not intended to, nor do they, override trust instruments. For public policy reasons, the Legislature saw fit to provide that the FLA address the situation where there is property to which a child is entitled but the child only has a guardian and there is no existing trustee. In circumstances where the property exceeds the prescribed amount in the small property exception the child’s guardian is not deemed to be the child’s trustee simply because they are a guardian. An application to the Court is required in order to determine who the appropriate trustee should be. Section 179 provides the factors the Court should consider when appointing a child’s trustee. Similar to other provisions in the FLA, the best interests of the child are paramount. An example of a situation when this might occur would be if a child received property from a relative who died intestate.
[17] Part 8 also recognizes in s. 175 that a trust instrument includes a will and that trustees are authorized under such an instrument to receive or hold property in trust for a child. In other words, such a trustee is included in the definition of trustee just as is a trustee appointed under the FLA.
[21] To assert that children’s property advanced to a guardian by anyone is caught by these sections extends the FLA provisions beyond their purpose and the problem they were intended to address. The purpose of these sections is to ensure that there is a trustee to protect the interests of the child, whether that is the guardian as trustee or another person does not matter. The point is to have someone responsible for the infant’s funds and to address the fact, that often for various practical reasons, it is desirable for the guardians to have the funds. Where there is no trustee and where the property exceeds a certain value, the guardian can be appointed as trustee.
[22] This is not a situation where there is uncertainty over who is the infant’s trustee. It is the trust instrument (the Will) that establishes the trust and names the trustees. It is the terms of that instrument that govern the trust. As long as the trustees comply with the terms of the trust they are protected. In accepting a receipt from the guardian they would be acting in accordance with the terms of the will and the trust and as a result that would be a valid discharge.
[23] The trustees are in this instance attempting to delegate their duties as trustees to a third party. In effect they are seeking an order that amounts to a variation of the Will.
