Financial Planning Body of Knowledge
The Financial Planning Body of Knowledge (FP-BoK) describes knowledge expected of CFP® professionals
and FPSC Level 1® Certificants in Financial Planning.
Taxation of Inter Vivos Trusts
KNOWLEDGE EXPECTED OF: CFP® Professionals Only
- 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)
Read more about the Taxonomy used in the FP-BoK
To state exactly the meaning of
To be aware of / to recognize and correctly name / to locate an appropriate resource
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To note the similarities and differences between two or more things
To determine an approximate value for
To find the value using mathematics
To change from one form or purpose to another
To reach a conclusion or make a judgement through careful study
To give the meaning of / to construe or understand / to translate orally