In finding that the use of income or capital from a purported spousal trust to pay life insurance premiums on spouse's life would disqualify trust from inception, CRA stated:
[T]he relevant legislation does not contain a requirement that the spouse “benefit” from the trust while alive... . [However] a trustee’s duty to maintain certain income producing or capital appreciating properties which may potentially benefit a spouse during their lifetime, is not...analogous to the payment of insurance premiums by the trustee to maintain rights to receive the insurance proceeds by the policy beneficiary after the death of the spouse. ...[W]e consider the payment of premiums by the trust to be property used to establish the residual beneficiaries’ rights to funds from the policy that will be realized after the death of the spouse.