A U.S. resident (the “grantor”) settles a “revocable living trust” with property including taxable Canadian property. The grantor: is the sole trustee; until death is the sole beneficiary with rights to income and any encroachments of capital; and may revoke the trust at any time. The trust provisions may provide for a distribution of the trust property to named beneficiaries upon the death of the grantor. In light of De Mond, does this arrangement constitute a trust?
CRA indicated that De Mond has not altered its view (in 9518515) that a revocable living trust is recognized at the time that legal title to property is transferred to it, with such transfer being considered to occur at fair market value. The key distinction between a revocable living trust, and a bare trust, is that the former generally includes remainder beneficiaries, so that there is a change in beneficial ownership when property is transferred to the trust.