Canada and the US are highly litigious countries. Certain professions are in a high risk of being sued such as doctors, dentists, lawyers, directors of public companies, to name a few… as well as high net worth individuals in general. Professional liability insurance in many cases only provides coverage of $ 1 million which may not be enough to satisfy a judgment. If you get a huge judgment against you, it could wipe out your entire retirement savings leaving you penniless after having worked hard and saved your entire life.
If you are a high net worth individual about to get married and you want to protect your assets in the case of a divorce then you can do that with an offshore Asset Protection Trust.
An offshore Asset Protection Trust makes it difficult for creditors, including the Canada Revenue Agency, and disgruntled ex-spouses to seize your assets. Some of the obstacles that an offshore Asset Protection Trust provides are:
• Strict limitation periods for creditors seeking to set aside a transfer of assets into the Asset Protection Trust on the basis of fraudulent conveyance
• Not recognizing a foreign judgment
• Costs barriers of having to commence legal proceedings in a foreign country and retain local lawyers to represent you in that country’s courts
• The use of “nominee” shareholders in the case of a corporation to hide the identity of the beneficial owner
• Investor friendly procedural laws that restrict the use of the “discovery” process by creditors
• Practical hurdles in having to travel far away to try and enforce a judgement
If structured properly, in the right jurisdiction, an offshore Asset Protection Trust is an effective way for anyone with significant assets to protect those assets from lawsuits and potential creditors.