Rhonda Britton is divorced and lives with her $12-$year$-$old daughter, Kimberleigh. Rhonda plans to settle a trust

for Kimberleigh and transfer $$200,000$ in cash to it$,$ which will be invested for Kimberleigh's benefit. The terms of

the trust are as follows:

The trust will invest the funds in Canadian marketable securities$.$

Income will accrue annually to Kimberleigh's benefit. However, no income will be distributed until Kimber$-$

leigh reaches $21$ years of age.

When Kimberleigh reaches the age of $35,$ all of the trust's capital will be distributed and the trust will cease.

The trustee has developed a financial plan that includes certain mutual fund investments. The anticipated annual

return on the investments is $12\%.$ Returns that are distributed by the mutual funds will be reinvested in the

mutual funds. It is expected that the $12\%$ annual return will consist of the following.

Required:

Explain the overall tax treatment of the trust during its existence, and recommend any tax planning opportunities

that are available to the trustee.