Changes to Testamentary Trusts—The New Rules Are Here

Spring 2016 DFK Newsletter Article

Author: Terry Soloman, CPA, CA, TEP, Partner, MRSB Group, Charlottetown, PEI, DFK Affiliate Firm

Much has been written on the legislative changes to testamentary trusts, which were originally announced in 2014. These revised rules became effective January 1, 2016. Although beyond the scope of this article, generally, preferential tax treat-ment that had previously existed has been restricted or removed for certain testamentary trusts. Under the new rules, many of the tax benefits have been restricted to “graduated rate estates.”

The following questions may help you determine if these new rules may impact your estate planning:

  • Does your current will create multiple testamentary trusts?
  • Does your current will create a spousal testamentary trust?
  • Is your current estate plan designed to have multiple wills?
  • Does your current estate plan involve alter ego or joint partner trusts?
  • Does your current will or estate plan provide for any large donations to a registered charity?
  • Is it anticipated the estate will exist for longer than 36 months?
  • Are you involved in an existing estate that has continued for longer than 36 months?
  • Does your estate anticipate disabled beneficiaries?

If the answer to any of the above questions is yes, it may be prudent to review the potential impact of these  new  rules  on  your  estate plan with your accountant to ensure there are no unanticipated consequences of the new rules.


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