An estate is a beneficiary of an inter vivos trust (which, for instance, is in turn the beneficiary of a life insurance policy). Would a payment from that trust to the estate disqualify it as a testamentary trust and, thus, as a graduated rate estate?
CRA noted that the graduated rate estate definition requires that an estate must be a testamentary trust, whose definition requires that no property have been contributed to the trust otherwise than by an individual on or after the individual’s death and as a consequence thereof – so that the property contributed to the estate, as the beneficiary of the inter vivos trust, causes the estate to fail as a GRE.