Minors, Trustees and Disability Planning

Payment capacity differs from policy capacity

A minor may have special statutory capacity to make insurance contracts without having identical capacity as a beneficiary. The agent must distinguish owning a policy, consenting to insurance, and receiving or discharging a benefit.

BC section 72 grants insurance-contract capacity from sixteen, except for rights as beneficiary. Section 88 of the Insurance Act separately gives a beneficiary aged eighteen capacity to receive insurance money and discharge it, even though BC's general age of majority is nineteen.

This exception is important. It is inaccurate to insist that every BC beneficiary must wait until nineteen, or to say that sixteen-year-old policy ownership necessarily permits discharge of a death benefit.

Parent does not automatically administer every payment

• Guardianship of a child's person is different from authority over the child's property. A parent may need a trustee appointment, lawful property authority, or another statutory route to receive substantial proceeds.

• BC section 88 directs money for a younger minor to an appointed insurance trustee or, absent such appointment, the Public Guardian and Trustee, subject to its provisions. It also requires notification to the Public Guardian and Trustee after specified trustee payments.

• Other jurisdictions differ. Ontario's child-property guidance describes court guardianship and specified payments up to a statutory threshold to a qualifying parent or custodian. Do not convert BC's route into a national rule that all money always goes to a public trustee.

An insurance trustee supports administration

An owner can appoint a trustee for a beneficiary through the permitted instrument. BC section 62 provides for insurer payment to the trustee and discharge to that extent. This can allow prompt administration for a child without naming the owner's estate as recipient.

The appointment should identify who acts, which beneficiary benefits, and the relevant terms. A replacement trustee may be needed if the original trustee dies or cannot act. The agent should use the insurer's process and refer substantive trust drafting to legal counsel.

Naming a trustee is not equivalent to giving that person the money personally. The funds must be managed for the beneficiary under the applicable duties and trust terms.

Trustee duties are substantive

A trustee must act loyally, keep appropriate records, distinguish trust property from personal funds, invest prudently under the governing standard, and account as required. Personal convenience does not justify using the child's money for the trustee's own expenses.

Suppose an aunt receives $200,000 as insurance trustee for a child. She cannot treat it as a personal gift simply because she is also caring for the child. Permitted expenditures depend on the trust terms and law.

Separate accounts and clear transaction records support proper administration. They also help the beneficiary understand later how the money was used. The agent should explain these obligations before recommending a proposed trustee solely because that person is a trusted relative.

Age and distribution terms

A simple trust arrangement may require transfer at the applicable age or when the beneficiary becomes entitled under its terms. An owner who wants staged payments beyond adulthood needs properly drafted legal terms.

For example, an intention to pay at ages twenty-five and thirty is not achieved merely by naming “uncle as trustee” without adequate directions. The trustee cannot indefinitely withhold an adult beneficiary's property based solely on an informal family preference.

A trust may also provide for education, care, or maintenance before final distribution. Counsel should coordinate the insurance designation and trust instrument so that the insurer's payment and trustee's duties fit together.

Beneficiaries with disabilities

Disability does not automatically mean legal incapacity. Assess the person's actual authority and any lawful representative rather than excluding them from decision-making because of a diagnosis.

A trust for a person receiving means-tested benefits needs specialized advice. Trust type, discretion, provincial program rules, and the person's circumstances can affect eligibility. Naming a “Henson trust” does not guarantee protection under every public program or province.

The owner should discuss intended support, benefit preservation, trustee succession, and oversight with qualified counsel. The agent's role is to identify the need and coordinate the insurance structure, not promise a universal legal outcome.

A designation naming a child and a designation appointing a trustee for that child perform different functions. The first identifies who is entitled; the second addresses who receives and administers the money in the relevant capacity. An agent should not assume that the child's parent automatically fills the second role. Clarify the intended arrangement while the owner can act, then obtain appropriate legal drafting where a continuing trust, disability planning or restrictions on distributions are intended.

Plan before the claim

Record the beneficiary's age, current designation, trustee identity, governing province, and any relevant incapacity documents. Confirm that the insurer can administer the intended payment.

A clear plan can reduce delay and family conflict while preserving the beneficiary's property. The objective is lawful receipt and responsible management, not simply choosing an adult name to make a form easier to complete.