Ch. 38 - Trusts

Question 1

Settlor - definition

Answer 1

an individual who transfers title to property to a trustee

Question 2

trustee - definition

Answer 2

an individual who holds title to the property and manages the property for the benefit of the beneficiaries

Question 3

beneficiary - definition

Answer 3

individuals who benefit from income and capital distributions of a trust

Question 4

Three certainties for a trust to exist:

Answer 4

1. Certainty of intention
2. Certainty of subject matter
3. Certainty of objects

Question 5

Types of trusts

two categories

Answer 5

1. testamentary

2. inter vivos

Question 6

Types of Testamentary trusts

Answer 6

1. spousal

2. beneficiary other than spouse

Question 7

Spousal testamentary trusts

Answer 7

1. beneficiary spouse is entitled to receive all income

2. no other individual received income from the trust

Question 8

Beneficiary other than spouse trusts

Answer 8

1. individuals other than the spouse are beneficiaries of both income and capital

Question 9

Types of inter vivos trusts

Answer 9

1. spousal
2. joint spousal
3. alter ego
4. family

Question 10

spousal inter vivos trusts

Answer 10

1. beneficiary spouse must be entitled to all income during lifetime of the settlor
2. spouse must be the only individual who may receive income or capital from the trust
3. on death of the settlor, the trust becomes a testamentary trust

Question 11

joint spousal trusts

Answer 11

1. the settlor must have been at least 65 wen trust was created
2. the settlor and his/her spouse must be entitled to receive all income before the later of their deaths
3. the settlor and his/her spouse are the only ones who can receive or use capital of the trust

Question 12

Alter ego trusts

Answer 12

1. settlor must be at least 65 when the trust was created
2. settlor must be entitled to all income of the trust during the settlors lifetime
3. the settlor is the only one that can use or receive income or capital during his or her life

Question 13

Family trusts

Answer 13

1. beneficiaries other than the settlor or spouse are entitled to income and capital of the trust

Question 14

Transfer of property to trusts (taxable vs non-taxable)

Answer 14

1. transfers of property to a spousal, joint spousal or alter ego trust are done at cost (non-taxable)
2. transfers to other trusts are deemed dispositions at fair value

Question 15

Graduated Rate Estate Criteria

Answer 15

1. less than 3 years old
2. it is a testamentary trust
3. the SIN is provided in the estates return
4. the estate designates itself as a GRE
5. no other estate is designated as a GRE