Words and Phrases - "mental infirmity"

In response to requested clarification concerning the meaning of “mental infirmity” and the consequences of annual distributions from a lifetime benefit trust that are immediately deposited into a “Henson Trust”, as well as the final distribution of remaining property of the trust following the death of the infirm beneficiary, CRA stated:

The determination of mental infirmity for purposes of the first condition above is a question of fact as this term is not defined in the Act. The provision does not apply to a physically infirm dependant unless there is also a mental infirmity, and it does not require that the infirm individual be eligible for the disability tax credit. In addition, it must be possible to clearly demonstrate a causal connection between the mental infirmity and the dependence of the child or grandchild for support. …

[D]epending on the circumstances surrounding subsequently deposited amounts, these payments could possibly contravene the requirements under paragraph 60.011(1)(b) … .

[T]he general trust rules found in subsections 107(1) and (2) will apply to distributions of a lifetime benefit trust in determining: (i) the adjusted cost base and the proceeds of disposition of the capital interest in the trust disposed of by the beneficiary; and (ii) the cost of the property acquired by the beneficiary in satisfaction of his or her capital interest in the trust.