Principal Issues: In the particular situation, the trustee/beneficiary exercised a power to add beneficiaries to the trust. We are asked if, having regard to all the circumstances, there was a disposition to the trust of its assets or, a disposition to any existing beneficiary of all or part of an interest held in the trust.
Position: 1. There is no disposition to the trust. 2. The trustee/beneficiary may be viewed as having made a gift inter vivos to the new beneficiaries of part of the interest the trustee held in the trust and as such there may be deemed proceeds of disposition pursuant to subparagraph 69(1)(b)(ii). The remaining existing beneficiaries may each be viewed as having disposed of part of an interest in the trust but there appear on the facts to be no proceeds of disposition for purposes of the Act.
Reasons: 1. No variation to the trust was needed to add the new beneficiaries. 2. The trustee who exercises the power to add beneficiaries may be viewed as having voluntarily transferred part of the interest held to the new beneficiaries. The existing beneficiaries, other than the trustee, do not direct to whom the interest is transferred; there is no basis in the facts given to find that the the existing and new beneficiaries do not deal at arm's length for purposes of subparagraph 69(1)(b)(i).