BoK Statement

Define an inter vivos trust.¹
Identify how an inter vivos trust is viewed in relation to the parties to the trust for tax purposes.
Explain how property transferred into an inter vivos trust may be treated for tax purposes.
Explain circumstances when a tax-deferred transfer of capital property may be made into an inter vivos trust.²
Identify circumstances when an election to opt out of a tax-deferred rollover of property into an inter vivos trust may be beneficial, such as:
- Settlor has carry-forward capital losses that may be used to offset capital gains upon deemed disposition of property
- Settlor has capital gain deduction limit that may be used upon deemed disposition of property
Explain how income earned by an inter vivos trust will be taxed.
- For income retained by a trust
- For income distributed to the beneficiaries
Explain when property is deemed to have been disposed of by an inter vivos trust.
- For a spousal trust
- For an alter ego trust
- For a joint partner trust
- For all other trusts
Define a preferred beneficiary of a trust for income tax purposes.³
Explain the value at which capital property may be transferred to a beneficiary from an inter vivos trust.
- When the trust is irrevocable
- When the trust is revocable
Identify that an election is available where a preferred beneficiary may be allocated income from an inter vivos trust without having the funds distributed to them.
Identify the tax year end for an inter vivos trust.
- For an inter vivos trust
- For an inter vivos trust in the year the trust is wound up

Glossary of Verbs (mouse over to see definition)

Define

To state exactly the meaning of

Identify

To be aware of / to recognize and correctly name / to locate an appropriate resource

Explain

To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it

Compare

To note the similarities and differences between two or more things

Estimate

To determine an approximate value for

Calculate

To find the value using mathematics

Convert

To change from one form or purpose to another

Evaluate

To reach a conclusion or make a judgement through careful study

Interpret

To give the meaning of / to construe or understand / to translate orally

Read more about the Taxonomy used in the FP-BoK

Financial Planning Body of Knowledge

knowledge topics

Taxation of Inter Vivos Trusts

KNOWLEDGE EXPECTED OF: CFP® Professionals Only

Glossary of Verbs (mouse over to see definition)

RELEVANT CASE STUDIES

REFERENCES

KNOWLEDGE EXPECTED OF: CFP^® Professionals Only