Settler transfer cash to a US asset protection Trust which in turn enters into a private annuity contract with Settler; Annuities and the Trust are creditor protected under US law.
Tenancy by Entirety
Assets could be settled on a Florida resident trust with beneficial interest held as a Tenancy by the entirety; this beneficial interest would be creditor protected.
Hold Assets outside of Canada
For those business dealings abroad Canada has an open door policy with respect to the enforcement of foreign judgements, consider holding assets in jurisdictions with more restrictive laws on the enforcement of foreign judgements.
Make use of foreign jurisdiction and legal entities
Many foreign jurisdictions are far less accommodating to creditors and have entities like LLCs and Trusts that provide significant asset protection (Link to the presentations slides)
A Homestead Exemption for Canadians
- Florida (and a number of other US states) permit spouses to own property as Tenants by the Entirety (TE); a form of ownership based on the principal that spouses may be viewed legally as “one person”
- Termination of this Tenancy may only occur upon dissolution of marriage; by consent of both spouses; or by seizure/sale of TE property by a joint creditor of Both Spouses.
- In the absence of a successful proceeding under the Florida Uniform Fraudulent Conveyance Act (demonstrating an intent of the spouses to utilize the TE form of ownership as a mechanism to hinder Creditors) no legal process in Florida exists to permit unilateral creditors of one spouse to reach property held as a TE. A Cdn. judgement against the debtor spouse alone would not under Florida law be eligible against property held by spouses as TE (whether real or personal property)
- Property held in TE is treated as Exempt under s. 522 of US Bankruptcy code; and unlike homestead exemptions in Bankruptcy there is currently no limit to the value of property that may be treated as exempt.
- Would a Canadian Court order the non debtor spouse to sell Florida property to aid a Creditor? The general rule is to defer to the foreign jurisdiction when the matter necessarily involves a determination as to the title of foreign real estate. The exception to the rule would require that some legal obligation in Contract/Tort or Equity existed between the Creditor and non debtor spouse that was independent of the non debtor spouse’s acquisition of title in the foreign property. In circumstances where the non debtor spouse has no dealings with the Creditor, the general rule should prevail.
- To extend this TE protection to personal property, title could be vested in a U.S. trustee (Trust assets comprising Bank/Brokerage Accounts situated in Florida) with beneficial interests held by spouses in TE. Presumably the Trustee would lack the required minimum contacts with Canada to allow for the enforcement of any Canadian judgement.