Under the terms of a deceased person's will, all property is bequeathed in equal shares to the deceased’s children. The heirs, in order to financially protect their sister until her death given her precarious health, have signed an agreement whereby the net assets of the estate will be held in trust in a separate account and administered by three of the deceased's children, so that income and encroachments on capital can support her until her death, with the remaining net assets, upon her death, being distributed to the remaining children.
CRA stated:
If the entity created by the heirs is a trust for civil law purposes but is not a testamentary trust for the purposes of the Act, the provisions of subsection 75(2) apply to the heirs resulting in an allocation of income on the property they have transferred to the trust (or property substituted for it) since it is expected that the property will revert to them at the time of their sister's death.