CRA's Views On Charitable Remainder Trusts

Introduction

Charitable remainder trusts have been popular in the U.S. for some time but not as widely used in Canada as a result of differences in our tax regime.  A charitable remainder trust involves an individual who wishes to make a gift to charity, but only following the death of the life tenant of a trust, all while benefiting from a donation tax credit at the time that he or she transfers the gifted property to the trust.  Charitable remainder trusts work well in the inter vivos (i.e., during one's lifetime) context, but have posed issues in recent years in the testamentary (i.e., on death) context as a result of changes to the laws on testamentary charitable giving.  This article provides an overview of charitable remainder trusts ("CRTs"), the issues surrounding testamentary CRTs, and Canada Revenue Agency's ("CRA") views on the matter.