TRUSTS (PG. 233-263) & (PG. 507-526)

Question 1

GRADUATED RATE ESTATE (TESTAMENTARY TRUST)

Answer 1

An estate that arises as a consequence of an individual’s death

Question 2

QUALIFIED DISABILITY TRUST (TESTAMENTARY TRUST)

Answer 2

A testamentary trust that is created on the death of a particular individual, and that jointly elects with one or more beneficiaries under the trust to be a qualified disability trust for the year.

Question 3

QUALIFIED DISABILITY TRUST RECOVERY TAX

Answer 3

Claws back any tax savings for income taxed at graduated rates that is subsequently distributed as capital to a non-electing beneficiary.

Question 4

INTER VIVOS TRUST

• REGULAR TRUST (FAMILY TRUST)
• SPOUSAL/COMMON-LAW PARTNER TRUST (LIFE INTEREST TRUST)
• ALTER EGO TRUST (LIFE INTEREST TRUST)
• JOINT PARTNER TRUST (LIFE INTEREST TRUST)

Answer 4

A trust that is established during the settlor’s lifetime

Question 5

GRANNY TRUSTS

Answer 5

A trust created where parents or grandparents who have never lived in Canada and plan to make bequests to Canadian children grandchildren on their death or prior to their death

Question 6

TRUSTS

Answer 6

Facilitate the settlor’s ability to transfer property, but not control, to the beneficiaries or provide for the devolution of the trust property beyond the current generation of the beneficiaries

Question 7

SETTLOR

Answer 7

Person that contributes property into the trust

Question 8

TRUSTEE

Answer 8

Person who holds title to property within the trust

Question 9

TRUST PROPERTY

Answer 9

Property within the trust

Question 10

TRUST BENEFICIARY

Answer 10

Person(s) entitled to the benefit of the property

Question 11

CERTAINTY OF INTENTION

Answer 11

Clear that the settlor of the trust intended for a trust to exist

Question 12

CERTAINTY OF SUBJECT MATTER

Answer 12

Clear which property is being transferred to the trust

Question 13

CERTAINTY OF OBJECTS

Answer 13

Clear who the benficiary(ies) are (is)

Question 14

ESTATE EXECUTOR

Answer 14

Fills the role of the trustee in respect of the estate

Question 15

TESTAMENTARY TRUST

Answer 15

A trust that is established as a result of the settlor’s death

Question 16

TESTAMENTARY TRUST

• REGULAR TRUST (FAMILY TRUST)
• SPOUSAL/COMMON-LAW PARTNER TRUST (LIFE INTEREST TRUST)
• ESTATE
• GRADUATED RATE ESTATE
• QUALIFIED DISABILITY TRUST

Answer 16

A trust that is established as a result of the settlor’s death

Question 17

REGULAR TRUST (FAMILY TRUST)

Answer 17

Established for the benefit of family members

Question 18

LIFE INTEREST

• SPOUSAL/COMMON-LAW PARTNER TRUST
• ALTER EGO TRUST
• JOINT PARTNER TRUST

Answer 18

Individual has special rights that must be met in the establishment and/or ongoing existence of the particular trust and for the trust to benefit from special tax treatment.

Question 19

VESTS INDEFEASIBLY

Answer 19

Property transferred cannot be revoked, voided or conditional in nature

Question 20

EXONERATION CALUSE

Answer 20

Debts, expenses and taxes of the estate that are to be paid out of the residue of the estate

Question 21

21 YEAR DEEMED DISPOSITION RULE

Answer 21

Automatic deemed disposition of capital assets held by the trust on the 21st anniverssary of the trust.

Question 22

REVERSIONARY TRUST

Answer 22

An inter vivos trust that holds property based on certain conditions (Pg. 260)

Question 23

PREFERRED BENEFICIARY

Answer 23

Allows the trustee to elect to allocate income from the trust to a qualifying benficiary, while retaining the income in the trust

Question 24

TRUST WIND UP

Answer 24

All assets within the trust have been distributed and no assets remain

Question 25

CAPITAL GAINS RESERVE

Answer 25

Payments associated with capital transactions that may occur over time