CRA indicated that a (U.S.) revocable living trust is a true trust and not a bare trust given that it has remainder beneficiaries. CRA then was asked: Would a Canadian resident who is a remainder beneficiary be considered to have “acquired” the capital interest from the decedent at a cost equal to its fair market value immediately prior to the death of the grantor?
CRA indicated that the capital interest of the remainder beneficiary would have been acquired as a consequence of the terms of the trust and not as a consequence of the death of the settlor, so that s. 70(5)(b) would not apply to determine the adjusted cost base of the remainder beneficiary’s capital interest in the trust.