CRA considers that the s. 44.1 rollover is not available to shares issued to a discretionary trust, distributed to a beneficiary and then sold

An individual "other than a trust" who disposes of shares which qualified as eligible small business corporation shares "of" the individual at the time of their issuance will be eligible for rollover treatment if replacement shares are acquired and a host of other conditions are satisfied.

CRA considers that shares which were issued to a family trust and later distributed to a beneficiary will not qualify for the rollover treatment on a subsequent sale of those shares by the beneficiary.  This is a reasonable interpretation: the beneficial interest of the individual in a trust (at least provided that it is not vested in possession) likely falls short of those shares qualifying as shares "of" the individual when they are issued to the trust.

Neal Armstrong.  Summary of 27 November 2012 T.I. 2012-0445941E5 F under s. 44.1(1) - qualifying disposition.