Can a family trust holding my shares still qualify for the capital gains exemption on a sale?

Yes, a family trust can hold qualifying shares and still allow access to the exemption, but the mechanics work a bit differently than for an individual owning shares directly. The trust itself doesn't personally use the exemption; instead, when the trust realizes a capital gain on selling qualifying shares, it can generally allocate that gain out to its individual beneficiaries, each of whom can then apply their own available exemption against their allocated portion, provided the trust, the shares, and each beneficiary meet the applicable qualifying conditions.

This means the trust and the underlying shares still need to satisfy the same kind of tests that apply to shares held directly — the active-business-asset requirements and holding-period conditions among them — and the trust needs to be properly structured and administered, with allocations to beneficiaries actually reflecting genuine entitlements under the trust, not just a convenient tax-driven split decided at the last minute.

Because trust structures used for this purpose are usually set up well in advance of any sale, and because the allocation mechanics need to be done correctly and documented at the time of the sale, this is an area where ongoing coordination with a tax advisor, from well before a sale is contemplated, makes a real difference.