CRA indicates that there is generally an acquisition of control of any trust-controlled corporation where an unrelated person becomes a replacement trustee

Regarding where the settlor of an alter ego or joint partner trust changes, e.g., upon the incapacity or death of the settlor, CRA indicated that it generally was of the view that the trustees of a trust who hold a power to encroach on capital, thereby hold discretionary authority with respect to the capital of the trust as described in the condition in s. 256(7)(i)(ii), so that the exception from an acquisition of control in s. 256(7)(i) would not apply to deem there to be no acquisition of control of a corporation held by the trust in such a situation.

Where s. 256(7)(i) does not apply, under CRA's longstanding position (see 2022-0928191C6) it would generally take the position that there would be an acquisition of control if an unrelated person became a trustee.

Neal Armstrong. Summary of 2 June 2026 STEP Roundtable, Q.8 under s. 256(7)(i)(ii).