CRA considers that payment by a spousal trust of life insurance premiums on the spouse’s life disqualifies the trust

One of the requirements to have a good spousal trust is that noone other than the spouse obtain the use of trust capital or income before the spouse’s death. CRA considers this requirement to be violated where a purported spousal trust pays insurance premiums on the spouse's life even though the life insurance proceeds will not be paid out until the spouse’s death.

Neal Armstrong. Summary of 16 November 2015 T.I. 2014-0529361E5 under s. 73(1.01)(c).