testamentary trust, with a policy endorsement for the suspension of the payment of premiums throughout its holding by a spousal trust would not in itself disqualify it as a spousal trust? CRA responded:
[T]he obligation to fund a life insurance policy out of the capital or income of a trust is one under which a person other than the surviving spouse or common-law partner may obtain the use of any part of the income or capital for the purposes of subparagraph 70(6)(b)(ii). The reason is that payment of the premium is presumed to maintain, for the period covered by the premium, the rights to receive the insurance product by the beneficiary of the policy, which will never be the surviving spouse or common-law partner.
…Assuming that the ownership of the insurance contract, following the death of the testator who was the policy buyer and holder, has been lawfully transferred to that trust and that the latter (or its trustees) has not disbursed from the income or capital of the trust to maintain the policy in force and no other person, other than the surviving spouse or common-law partner, can, before the death of the spouse or common-law partner, receive or obtain any portion, if any, of the income or cash surrender value of this policy, it appears to us that the condition of subparagraph 70(6)(b)(ii) would be satisfied.