In Ontario, children under 18 cannot receive control over any money left to them in an insurance policy. If you want the children to receive the money, you should name a trustee or administrator and set up a trust. When you die, the trustee or administrator will hold the death benefit in trust for the children until they are 18 years old, at which point the money will be paid out to the child.
It is essential to choose a responsible trustee who you can trust. The trustee is responsible for:
- keeping careful records of all dealings with the money.
- investing the money as required by a court-approved management plan.
- passing the accounts before the courts on a fixed schedule; and
- transferring all of the money to the children at age 18.
Consult with a lawyer or financial advisor for more information on naming your children as beneficiaries.
If you die without naming a trustee or administrator, the death benefit and any earned interest will be held in trust by the province of Ontario and paid out when the children reach legal age.
Easy answer provided by FSCO (Financial Services Commission of Ontario)