Protecting your Canadian wealth and domestic assets from potential financial enemies is vital for many individuals. In particular, spouses contemplating divorce or going through relationship problems many need to take urgent action to protect their assets from spouses who may try to squeeze as much money and assets out of them as possible on divorce.
Other circumstances where protecting domestic assets is important include:
- Individuals planning to get married may be considering taking steps to ring-fence their existing wealth in case of marriage breakdown
- Clients who need to consider making a will to ensure their estate is left to others in the most tax efficient way possible
- Business clients who need to restructure their assets for commercial purposes and personal protection
- Transferring property to others to protect from claims by former partners, business creditors or tax authorities
- Placing property into trust
A marriage contract – also known as pre-nuptial agreements – allows you and your future spouse to plan ahead. They can be particularly beneficial in the case of second marriages where there is potentially multiple ownership of property assets, and children from former relationships. These factors can make the financial side of things particularly complex.
The reality is that in today’s society people are marrying older: a marriage contract enables you both to discuss the assets you are each bringing into the marriage, and who will keep what in the event you split up at a later date. They are effectively an insurance policy, reducing the risk of future acrimonious and expensive litigation.
Making a will is, for the majority of adults, a vital way to protect your assets. You get to choose who gets what when you die; and crucially, you can use your will to mitigate your inheritance tax liability (and potentially other taxes) when you die. You can even use your will to create a trust for the benefit of others and to save tax.
You may be seeking to protect business assets from financial exposure. There are many businesses that have taken a lifetime to build – yet the owners have not implemented effective asset protection strategies – putting their hard-earned cash and assets at risk from others.
We may advise you to restructure your assets in terms of a different ownership structure, or to encumber property as means of reducing equity and moving it elsewhere – out of harm’s way. In other cases, trusts foundations and other offshore entities may be employed; or lifetime trust may best suit your business circumstances and personal needs.
It is very common for a client to want to transfer a property, or their share in property, to someone else to stop another from making a claim on it. Potential claimants may include creditors, ex-spouses and trustees in bankruptcy. However, if you transfer property with the express intention of protecting your share when bankruptcy is imminent – it will not work: the trustee in bankruptcy will be able to claw back the assets.
Transfers effected long in advance of any potential claims will generally be effective. For instance, an aging couple may wish to gift their property to an adult child to avoid or reduce their potential tax liability on death. If they are active and in good health, such a transfer should pose no problems. On the other hand, if they are in poor health and die soon after the transfer, the transfer may well be ineffective and the property will, for tax purposes, be treated as part of their estate.
The creation of a trust of domestic property may be effective to a certain extent. Whilst they can protect the client’s assets and the interests of the beneficiaries of the trust, they need to be correctly established, to be immune from potential attacks of creditors.
These are not your only options
You may be able to take advantage of insolvency laws to help you in the event of imminent bankruptcy; or you may benefit from taking out liability insurance, depending on your circumstances. Whatever your circumstances and needs – let us help you.
How can we help?
You will require carefully considered asset protection advice from experienced asset protection lawyers who can advise you how best to protect your domestic assets. Whatever the extent of your wealth, contact us to discuss your wealth and estate with us.
Our asset protection lawyers are highly experienced in both onshore and offshore jurisdictions. Our practice head, Andrew Rogerson, is an internationally known, award winning asset protection specialist barrister with many years’ practical experience in offshore jurisdictions. Contact us now to find out how we can protect your domestic assets and your assets in other jurisdictions.