In the last few years, trusts have been growing in popularity
among business people, including as an asset protection mechanism.
Since a trust is a patrimony by appropriation, neither the settlor
nor the beneficiaries have any ownership rights in the property
transferred, and therefore the property cannot, in theory, be
seized by their creditors.
A tangible proof of the growing popularity of trusts? In the
past year, Quebec courts have rendered two decisions involving
trusts that may have been constituted for the purpose of asset
protection (although other objectives may have been simultaneously
achieved, including tax objectives).
In each of these cases, a creditor brought an action to obtain a
declaration that certain transactions executed between his debtor
and a trust may not be set up against him, in order to seize the
property transferred to the trust as debt repayment.
