2020 Ruling 2020-0848231R3 F - Rollover of RRSP proceeds to a lifetime benefit trust. -- summary under Section 60.011

Background

The will of the deceased provided for the creation of a testamentary trust for the Beneficiary (the adult son of the deceased who, due to his psychological condition was not able to support himself) which provided that the Beneficiary was, during his lifetime, the sole beneficiary of the such Trust, with the residue to be distributed in accordance with the will, and which qualified as a "lifetime benefit trust."

Proposed transactions

1. Pursuant to the will the Executors will request that the RRSPs of the deceased be wound up and will transfer all RRSP monies to the Trust established pursuant to the Will, which will qualify as a "lifetime benefit trust" in accordance with s. 60.011(1).
2. The Executors and Beneficiary will file with the Minister (together with the deceased's final return and the Beneficiary's income tax return), in respect of each of the RRSPs, a joint designation under s. 146(8.1), so that all amounts paid by the RRSPs to the Executors are deemed to have been received by the Beneficiary as a refund of premiums.
3. Within the time periods set out in the preamble to s. 60(l), the Trust will acquire an annuity satisfying the conditions in s. 60.011(2)(a).
4. The beneficiary will elect in his return to have s. 60.011(3)(b)(ii) apply to the amount paid to acquire the annuity.

Rulings

The amounts jointly designated per 1 above will be deemed to be refunds of premiums in accordance with s. 146(8.1), and will be included in computing the Beneficiary's income pursuant to s. 146(8).

Such amount may be deducted, to the extent permitted by s. 146(8.9) – and the Executors may request a reassessment of the final return of the deceased if necessary to take these deductions into account.

The amount paid by the Trustees to acquire the annuity will be deductible by the Beneficiary to the extent permitted by s. 60(l), taking into account the provisions of s. 60.011(3).

During the lifetime of the Beneficiary, each payment received under the annuity by the Trust will be included in his income rather than the Trust’s income pursuant to ss. 56(1)(d.2) and 75.2.