Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Can a claimant direct another person from time to time to receive the structured settlement annuity payments after the claimant's death?
Position: Yes, provided document states this and issuer is informed
Reasons: Naming a new person during the claimant's lifetime in a structured settlement arrangement is similar to changing a beneficiary within a regular annuity during the lifetime of the claimant.
2004-007266
XXXXXXXXXX C. Tremblay, CMA
957-2139
May 26, 2004Dear XXXXXXXXXX,
Re: Structured Settlements
This is in reply to your letter of April 20, 2004 discussing the flexibility of naming persons to receive the annuity payments after the death of the claimant pursuant to a structured settlement arrangement.
We confirm that the language you suggest on the second page of your letter would not, in and by itself, cause the subsequent recipient to be taxed on the payments provided all the other requirements of a structured settlement as set out in paragraph 5 of IT-365R2 are met.
We also agree that the use of the terms "beneficiary" or "designate" in dealing with the payments to be made to the directed person following the death of the claimant should not be used in view of the potential confusion that may arise. The beneficiary and annuitant of the annuity in a structured settlement is the casualty insurer who retains ownership throughout the term of the annuity contract.
We trust the following comments are of assistance.
Yours truly,
For Director
Steve Tevlin
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
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