An offshore Asset Protection Trust is an effective shield for protecting your assets from lawsuits, creditors and the Canada Revenue Agency. But are they effective in protecting your property that is situated in Canada?
Generally speaking, offshore trusts are not as effective in protecting your real estate or other property located in Canada. This is because property that is located in Canada is subject to the powers of the Canadian courts and the local provincial laws.
If you were to transfer title of your property into the name of a Cook Islands offshore trust, for example, a Canadian court will still have jurisdiction over the property and could set aside the transfer, if it finds that the transfer constituted a fraudulent conveyance under Canadian law. In Ontario, for example, the Fraudulent Conveyances Act states that every conveyance made “with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as against such persons.”
That is not to say that a Canadian court would declare the transfer to be void, but it could. And since the property is located in Canada, it would then be available for your creditors to seize and sell.
Offshore asset protection planning is complicated. Much of the information on the internet about offshore trusts is put out there by document preparation companies that are not lawyers. If you are considering setting up an offshore Asset Protection Trust, you should always consult a lawyer first.
If you would like more information about offshore Asset Protection Trusts hit the link below.