# Asset Protection in Canada



## geewilickers (May 21, 2009)

There are a lot of books for Asset Protection in the US, but what about in Canada?

What are some tips and tricks for protecting your assets against:
- Frivolous Lawsuits
- Divorce
- Common Law Relationships
- Other businesses/corps
- Any other entity or matter

Could you recommend any good books?
Have you implemented an asset protection system? Has it protected you in an event? How did it help you?

Cheers,
Geewilickers


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## OhGreatGuru (May 24, 2009)

_- Divorce_

Marriage contracts. These went out of fashion in the 20th century, outside of Quebec with its Civil Code. But they are coming back, particularly with increasing divorce rates; and partners entering marriage with significant assets and/or prior marriages & children. Have to be done with proper legal representation for both partners. Can't sign away rights that are given by law.

_- Common Law Relationships_

Co-habitation agreements. More recent than marriage contracts, but perhaps even more needed, because common law spouses do not have the same legislated proper rights as married spouses. Needed more than ever, with more & more partners entering relationships with significant assets and/or children. Have to be done with proper legal representation for both partners. Can't sign away rights that are given by law.

_- Frivolous Lawsuits_

We are not quite so bad as the USA, which has a highly litigious environment, lawyers who will work on contingency (not permitted by most CDN bar associations), and a court system where juries can make huge awards. But CDN courts & lawyers do follow some of their practices, so good liability insurance is about the only risk management you can do.


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## Racer (Feb 3, 2010)

+1 for Guru's comments.

Here's a bit more: 

Death/disability

Estate planning books cover a number of ways to protect your assets in the event of death or disability. One of the best preventative measures I can think of is to cultivate a relationship with an insurance broker that you trust...

And if you don't have a will, enduring power of attorney, and personal directive, get those ASAP with a good lawyer -- you'll know you have a good one if they answer your questions with real detail and ask you a lot of questions about what you want to happen. 

Lawsuits

You can protect yourself against some types of lawsuits by adding an umbrella liability endorsement to your home & auto insurance plan. It covers personal injury lawsuits against your home or auto insurance plan that exceeds your regular limit. Those lawsuits involve catastrophic loss and aren't frivolous in the least - but the upside is that if you have the family protection endorsement (aka SPF 44, aka SEF 44) and YOU are hit by an underinsured driver, then you can tap into that higher limit. It will also cover social host liability (if you overserve alcohol to house guests who then drink & drive and cause an accident). And slander/libel suits, I think. I should read the fine print of my own insurance contract...

BTW, insurers don't seem to want to sell umbrella coverage. I found it difficult to add our $4M umbrella liability to our plan with Intact (formerly ING) - had to ask them about 4-5 times, and even had the premium money refunded to us. Our broker finally succeeded. Two of my friends had similar difficulties (we all attended the same seminar recommending it, so we all started trying to make the changes at the same time).

For businesses

You can protect your own assets from your business by never mixing the business' assets with your own (separate bank accts, etc) and if you have to incur losses, making sure that you never, ever try to short Canada Revenue.

If the bank has you sign a personal guarantee as a condition of lending to your young corporation, then set a reminder for 2 years from the time you sign to request to have that guarantee cancelled. If the bank refuses, then shop your debt around to a lender who will.

You can protect your business as it grows by dividing its assets and putting them into other subsidiary corporations. For example, a building should be held by one corporation, and the operating part out of another corporation. And any ventures into foreign markets or new types of products should be done through sister corporations or subsidiaries, so that you decide whether to absorb the loss or pull the plug.


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## geewilickers (May 21, 2009)

In the states they have lawsuit exemptions which can not be targetted, such as homestead exemptions (as to avoid people becoming homeless due to lawsuits), retirement exemptions, etc... do we have that in Canada? If so, what kind?

An American asset protection book I'm reading says you should convert your non-exemptable assets into exemptable assets. Also says not to bother transferring your home to a corporation as you would lose homestead exemption. I'm not sure if this applies in Canada, it would be interesting to find out.


Thanks for all the info you've provided! appreciated.


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## Racer (Feb 3, 2010)

Gee,

Yes... I think our exemptions are much more limited than the States -- we are much more strict when it comes to debtors (ironic, considering the American far right thinks of us as far-leftist). For example, I think that the exemptable amount for personal property is $500, a vehicle is only $5,000, and the house is only $40,000 of the debtor's share.

So how it would play out in my province is that a creditor would win the lawsuit, get a judgment, turn the judgment into a writ, and if the debtor (or the debtor's 50% if there is another owner) has more than $40,000 equity in the house, the creditor can register the writ against the title to the home and initiate foreclosure proceedings. If there's a spouse who is going to be turned out of the home because of creditor-foreclosure, they can make a claim from a special fund to be reimbursed. (This is only for creditor proceedings.) Writs can be registered in the personal property registry and the motor vehicle registry, and you can ensure that the debtor can't do certain things if there is an unsatisfied judgment against them (like prevent them from renewing their driver's license). If you've got a Jaguar worth $20,000, the car would be seized by a privately-hired bailiff and sold, then your exemption of $4,000 would be returned to the debtor so that they can buy themselves a beater car to get around in.

But please don't quote this until I can double check. Other province have different legislation; Alberta may be more harsh than a province like Ontario.


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## rsn (Jan 13, 2011)

What would be a good (differences; benefits) analysis between onshore and offshore formation in receiving basic asset protection from lawsuits. 

Is there an LLC equivalence here in Canada? (such as use of trust with incorporation or other subsidiary?) Or should you form a trust in a preferred jurisdiction? 

What are suggestions (or good questions to ask) in best selecting your professional advisors?


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