Alter ego trusts are increasingly being used an an estate planning tool for those over 65 years of age.
From the perspective of disinherited.com they are typically used by parents to disinherit a child(ren) so that the child(ren) has no recourse under wills variation proceedings( S. 60 WESA)
In Larochelle v. Soucie Estate, 2019 BCSC 1329 at paras. 174-175, Donegan J. (quoting from Donovan Waters On Trusts ) summarized the nature and function of alter ego trusts:
 The particular type of trust at issue in this case is referred to as an “alter ego trust”. This type of trust is defined by its tax consequences. Under the ITA, individuals over the age of 65 are allowed to transfer assets to this special type of inter vivos trust, set up exclusively for that individual’s own benefit in their lifetime. At creation, the same person is generally settlor, trustee, and beneficiary. In Waters Law of Trusts, an alter-ego trust is explained concisely at 633:
An “alter-ego trust” allows a person of the age of 65 or over to settle property upon an inter vivos trust with the right to roll the property into the trust free of capital gains as long as the settlor is entitled to receive all of the income of the trust that arises before his or her death and as long as no person except the settlor may obtain the use of any of the income or capital of the trust before the settlor’s death. This allows settlors to make inter vivos disposition of their property that might otherwise have been made under a will.
 As both parties point out, inter vivos trusts in general, and alter-ego trusts specifically, have been recognized as legitimate estate-planning tools.
In Mawdsley v. Meshen, 2012 BCCA 91, Newbury J.A. described the legitimate “protective” functions of corporations and trusts, including alter ego trusts, in the estate planning context this way:
 Corporations and trusts also serve “protective” functions in the realm of estate planning. For example, individuals wishing to “freeze” the value of their estates may “roll over” their existing shares to new corporations, or exchange their appreciating shares for fixed-value shares, on a tax-deferred basis. The future appreciation of the corporation may then accrue to the benefit of the next generation, either directly or through trusts.
In recent years, the “alter ego trust” has also been recognized in the Income Tax Act as an estate planning tool. Provided the settlor is age 65 or older, he or she may ‘roll’ assets to a trust that is for his or her sole benefit during his or her lifetime and then for the benefit of his or her chosen beneficiaries. Such trusts have several advantages: they are used to minimize or eliminate probate fees; they permit the control and management of assets located in various jurisdictions to be centralized and to ‘carry on’ after the settlor’s death without the need for court approvals or probate; they obviate the risk of asset diminution due to incapacity or diminished capacity on the part of the settlor; and where beneficial interests are subject to the exercise of the trustee’s discretion, they offer some protection from spendthrift family members, their spouses and others claiming through them: s