Before disagreeing with the proposition that when a settlor transfers appreciated property to a trust and the settlor is the income beneficiary, the settlor recognizes only the capital gain attributable to the residual interest, the CCRA indicated that "personal property cannot be severed into life and remainder interests. That is why trusts are used to gift residual interests in personal property - the life interest is severed from the residue by creating beneficial interests in both the charity and the settlor. To effect the severance, it is necessary for the settlor to legally dispose of the entire property to the trust".
