Assume that divorced parents, and possibly grandparents, would like to contribute to a trust for the benefit of a disabled child and coordinate their wills to do so. For instance, a qualified disability trust (QDT) is established under the will of Parent A after her death and, when Parent B subsequently dies, he bequeaths property to the same trust. Will that subsequent contribution disqualify the trust from being a QDT given the requirement in s. 122(3) that a QDT trust must be a testamentary trust that arose on and as a consequence of a particular individual’s death?
CRA responded that such subsequent contribution would not disqualify the trust from being a testamentary trust or a QDT because the transfer was made on and as a consequence of Parent B’s death in light of the s. 248(8)(a) deeming rule. The same reasoning would apply where another individual, such as a grandparent, bequeathed property to the child’s existing QDT. Accordingly, such subsequent contributions would not, by themselves, cause the trust (which had already arisen pursuant to the terms of the will of a particular individual, Parent A, and thus, as a consequence of that particular individual’s death) to be disqualified because they occurred as bequests and thus did not disqualify the QDT as a “testamentary trust” under para. (b) of that definition.
