Principal Issues: 1. Has the introduction of the QDT rules affected the availability of the preferred beneficiary election? Have there been any changes to the method in which the preferred beneficiary election is made? 2. Does a trust that otherwise qualifies to make the joint election to be a QDT and to make the preferred beneficiary election have the ability to choose which election to make, if any? 3. Can a trust that has elected to be a QDT for a taxation year also make a preferred beneficiary election in the same year? 4. Can an existing trust make a joint election to be a QDT in 2016?
Position: 1. No. 2. Yes. 3. Yes. 4. Yes.
Reasons: 1. There have been no changes to the preferred beneficiary election rules as a result of the changes to the rules applicable to testamentary trusts, including the introduction of the QDT. Similarly, there has been no change to the method in which the preferred beneficiary election is made. 2. Both the QDT and preferred beneficiary election are elective provisions. As such, the trustees together with the disabled beneficiary can choose which joint election will be made, if any. 3. QDTs and the preferred beneficiary election are not mutually exclusive elections. It is possible for a trust that has made a joint election to be a QDT to also make a preferred beneficiary election. 4. Provided that the trust meets the requirements to be a QDT as outlined in the definition of QDT in subsection 122(3), the trust can make a joint election to be a QDT. There is no requirement that the trust is created after 2015.
