(see also summary of initial response at 19 June 2015 STEP Roundtable, oral Q.2(a))
If an estate for a deceased who passed away after 2015 is under administration in its first 36 months, will it be considered a graduated rate estate in its entirety, even if there are two wills. At what point does the estate transition into testamentary trusts?
CRA indicated that the deceased has only one estate encompassing all of his or her property wherever it may be situated, and that this is so even if there are multiple wills with different executors. Para. (e) of the graduated rate estate definition in s. 248(1) does not imply the opposite but instead is intended to address the situation where there are different parties (executors, for example) each purporting to make the graduated rate estate designation. CRA stated:
The composition of the graduated rate estate for tax purposes will often depend on how the decedent wanted his/her assets to be administered as dictated by will. Where, for example, a will deals immediately with separating property to be held in a distinct testamentary trust apart from other assets of the estate, there can still only be one graduated rate estate allowed for tax purposes for the 36 month period (or earlier if administration is complete) following death....
Question 8 of the 2012 STEP Roundtable [stated]:
...[T]he estate of the deceased and other trusts funded out of the residue of the estate will generally be testamentary trusts. Traditionally, the CRA has not attributed any tax consequences to the transition from estate administration to trust administration and generally has viewed the trusts created out of the residue as arising on death.
In practice, however, "in circumstances where more than one trust is created out of the residue, a separate T3 trust number is assigned to each trust."