This is the second part of a series on trusts and the association rules. The first part appeared in the May 2026 issue of Canadian Tax Focus. The second part addresses how the rules can apply.
Divorced Spouses Divorced spouses must still coordinate their trust planning because one spouse will be deemed to own all shares held by a trust settled by the other spouse where their minor children are beneficiaries of the trust (see 256(1.3) and 256(1.2)(f)(ii)).
Ignorant beneficiaries The association rules apply in respect of a beneficiary’s interest in a trust even where the beneficiary is ignorant of the interest because they do not depend for their application on knowledge or intention.
Trusts that limit interests A trust deed that limited the entitlement of a beneficiary to a maximum amount was still treated as discretionary for the purposes of the association rules. See Moules Industriels (CHFG) Inc. v R, 2018 TCC 85.
Contingent beneficiaries A contingent beneficiary is still a beneficiary for the purposes of the association rules. See R v Propep Inc., 2009 FCA 274, and CRA technical interpretation 2005-0112511E5 (May 2, 2006).
Adam Solomon and Leanne Stevens “Trusts and the Association Rules: Part 2” Canadian Tax Focus 16:3 (August 2026)
