A typical offshore asset protection plan has three things:
1) A limited liability company;
2) A bank account in the company name;and
3) An offshore trust.
All of these should be domiciled outside of Canada.
The settlor of the trust transfers his or her assets to the company, and the company is owned by the Offshore Asset Protection Trust. The settlor ( the person establishing the Trust) is named as an officer of the company and given signing authority on the company’s bank account. In the case of a situation of duress, such as a lawsuit against the settlor or the Trust, there is a provision in the Trust Deed that requires the Trustee to remove the settlor as an officer of the company until the event of duress is over. In this type of structure, the settlor legally owns nothing – everything is owned by the Offshore Asset Protection Trust – but he or she has control over the assets through the company.
If a lawsuit is filed against the settlor, the plaintiff would have to continue the lawsuit in the jurisdiction where the Offshore Asset Protection Trust is located under that country’s laws. The plaintiff would have to hire foreign attorneys, pay a bond into the foreign court, and overcome legal obstacles in the foreign court jurisdiction that favours defendants in these situations.
Of course, it’s more complicated than that but this a typical Offshore Asset Protection structure.