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What can children do if parents mismanage or steal their property?

Region: Ontario Answer # 978

Parents, acting as a guardian of a child’s property, have a legal responsibility to act responsibly and diligently. Theft or mismanagement of property can result in criminal charges and civil court damages.

Generally, parents can assume guardianship of a child’s property if the value of the asset is under $10,000. Otherwise, to assume control of the child’s assets for amounts over $10,000, parents require a court order.

As guardian of the property, if possible, a parent must encourage the child to participate, to the best of the child’s abilities, in decisions about the property. And, of course, the guardian must act responsibly in managing the assets.

Trusts

When assets of a child have been transferred to a trust, a parent who is responsible for management of the trust must fulfill legal obligations and duties until the child reaches an age when the trust is dissolved. Again, theft or mismanagement of property can result in criminal charges and civil court damages.

If property is mismanaged: Remedial Constructive Trusts

What if there is no formal trust and yet a child feels an asset or property belongs to him or her, and that it has been misappropriated? In court, minors may be able to use a remedy called a “remedial constructive trust” to reclaim property misappropriated by parents.

Basically, in a parent-child situation, the Court would impose this remedy when a judge feels the parent has unjustly benefited at the expense of the child, where the child has some ownership rights in the asset. To make the order, the Court must find:

  • an “unjust enrichment” to the parent who owns the property,
  • a related “deprivation” (hardship) to the child making the claim, and
  • no legal justification to allow the situation to continue (such as evidence that the asset was a gift to the parent only).

A constructive trust does not require evidence of a common intention of the parent and child to share the property. The creation of a constructive trust and the determination of whether someone is a fiduciary are both rather complicated areas of law and it is best to consult a lawyer for assistance with these issues.

For more information about children and the law, refer to the Ministry of the Attorney General website.




								

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