CRA indicates that the settlor can be one of three trustees of an alter ego trust without engaging s. 75(2)

The trust deed for an alter ego trust provided that no capital distributions, including any capital gains, could be made while the settlor (who also was a trustee) was alive, that all decisions were by a majority vote of the three trustees, and did not include any provision granting the settlor the power to direct the future distributions that were to be made following the settlor’s death.

CRA indicated that, in general, these provisions did not engage s. 75(2). In particular, the settlor had no capital interest in the trust, and the settlor being one of the trustees acting by majority vote was permissible. However, s. 75(2) could still apply where the trust deed expressly required the settlor’s consent or direction with respect to any decision made by the trustees, including where decisions were made by the majority of trustees provided that that settlor-trustee was one of that majority.

Neal Armstrong. Summary of 4 June 2024 STEP Roundtable, Q.7 under s. 75(2).