Canadian & Foreign Trusts

Today, it is easy to find examples where individual's assets are compromised due to their professional activities or personal situation. Asset protection trust are an excellent vehicle to achieve estate planning goals and provide a degree of creditor protection against unanticipated claims. 

Trust have three main parts - Settlor, Trustee & Beneficiaries. In simplified terms a settlor is an individual or an entity who transfers an asset to the trust. Trustee is appointed by the settlor to manage the assets contained within the trust according to the wishes of the settlor and  for the benefit of the beneficiaries. Finally, beneficiaries are simply the ultimate owner of the assets contained in the trust. 

Revocable trust as the name implies is a structure whose existence can be revoked by the settlor. These trusts are generally for estate planning and avoiding probate fees on passing of inheritance to your family members. These trusts afford little creditor protection. On the other hand, irrevocable trusts are a structure that can't be revoked by the settlor. Thus, it provides the maximum asset protection from the creditors of the settlor and it can only be revoked by the order of a Canadian court.    

If you want further protection, offshore trusts are the best structure. Generally, these trusts are established in a pro debtor jurisdiction such as Panama, Belize, Cayman Islands, Hong Kong & United Kingdom etc. The aim is to avoid holding assets in a country where a lawsuit is expected and move it beyond the reach of the creditors. Furthermore, layer upon layer of LLC's, Corporations & IBC's are added to the trust structure to make it immune to litigation. Thus, it gives the debtor upper hand in negotiations with the creditors.