Personal Finance

How to transfer assets to spouse to protect from lawsuit?

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  • Mar 12th, 2006 12:05 am
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Newbie
Feb 4, 2006
25 posts

How to transfer assets to spouse to protect from lawsuit?

Many lawyers and doctors do this by giving house, asset to their spouse, in case of lawsuits. However recently when we bought a house, the Bank said if my wife is the only one on the mortgage, and purchase agreenment must only have her name. So we did that. Today my real estate lawyer said this setup only lets her be the only mortgage applicant, and by law, I still hold 50% of the assets. That does not help me if lawsuits are on me. Is diverce the only option for me now to make me own ZERO asset?

My business consistantly attrack lawsuits. So far, all lawsuits against me are all dropped after settlement, because I could not afford going on trial and lose. If I have no asset, I will take on the lawsuits myself, because I think the cases are all favoring me. I was already trying to reduce the risk by shifting most of my assets overseas and by incorporating in foreign countries.

But I want to enjoy my assets where I live, so the only thing I can think is to transfer everything to my wife and she pays my spending bills.
17 replies
Deal Fanatic
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May 1, 2003
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Divorce wont help you either if you still live in the house with your "ex" wife. You will still be considered common law and own 50%.
[OP]
Newbie
Feb 4, 2006
25 posts
bionicbadger wrote:Divorce wont help you either if you still live in the house with your "ex" wife. You will still be considered common law and own 50%.
I think Canadian Common Law does not automatically put partners into Common Law relationship. I think the partners must declare it.

In the worst case, I can say I rent a room from my exwife.
Deal Expert
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Jun 9, 2003
22671 posts
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Markham, ON
perhaps it time to conduct some business with cash?

then buy a safe for the house :)
Deal Fanatic
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Nov 13, 2005
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GTA
I believe according to family law, you are entitled to 50% of the house, its your matrimonial home, even though you are not on title. However, when it comes to liability, you technically don't own the house. If the property is registered in this fashion, any further encumbrances on the property, your wife will be debtor and you will be the guarantor.

I beleive this is how it works!!!!!

sk :)
Deal Guru
Aug 2, 2001
12754 posts
3650 upvotes
Doctor's, lawyers, businessmen, etc... create a corporation for their business.

Then, the lawsuits are against the corporation and the personal assets are no longer applicable. If bankrupt, only the company assets can be seized.

Deal Addict
Sep 1, 2005
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TrevorK wrote:Doctor's, lawyers, businessmen, etc... create a corporation for their business.

Then, the lawsuits are against the corporation and the personal assets are no longer applicable. If bankrupt, only the company assets can be seized.
Not ture (for the most part), Doctors, laywers, accoutants and engineers can be held personally accountable for their profesional actions.
I cant speak for the first 3 but I do know for a fact an engineer even ones working for a company are responsible for their designs and they can be sued and loose personal assests. Now a judge is not going to kick someone out of thier home for no good reason but the threat is there, profesional liablity insurance exsits for this exact reason.

If you own a small business that isn't incorperated then your exposing all your personal assests to suites that normallay go against the company. Very rarely can an employee be sued directly (expect when madated by various provencial acts, ussaly the same acts the create the self governing bodies that oversee various profesions)
Sr. Member
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Feb 2, 2005
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What busniess are you in? I hope for the sake of others you are not in construction, otherwise I'd have to get Mike Holmes to put the beats on you.

Why not get insurance against lawsuits?
Deal Addict
Dec 4, 2004
1979 posts
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Kingston
I believe according to family law, you are entitled to 50% of the house, its your matrimonial home, even though you are not on title. However, when it comes to liability, you technically don't own the house. If the property is registered in this fashion, any further encumbrances on the property, your wife will be debtor and you will be the guarantor.

I'm pretty sure it works like this too. Anyone confirm?
Deal Guru
Aug 2, 2001
12754 posts
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dark169 wrote:Not ture (for the most part), Doctors, laywers, accoutants and engineers can be held personally accountable for their profesional actions.
I cant speak for the first 3 but I do know for a fact an engineer even ones working for a company are responsible for their designs and they can be sued and loose personal assests. Now a judge is not going to kick someone out of thier home for no good reason but the threat is there, profesional liablity insurance exsits for this exact reason.
I thought that the company is supposed to obtain insurance, such as error's and omissions insurance, that will negate the need to pay out of pocket?
[OP]
Newbie
Feb 4, 2006
25 posts
sunnybono wrote:I believe according to family law, you are entitled to 50% of the house, its your matrimonial home, even though you are not on title. However, when it comes to liability, you technically don't own the house. If the property is registered in this fashion, any further encumbrances on the property, your wife will be debtor and you will be the guarantor.

I beleive this is how it works!!!!!

sk :)
What do you mean by debtor and guarantor. Let me give an example

Me: Overeas $900K asset, in Canada 100K cash/stock/savings, taxable income 0/y
Wife: Overseas 0, in Canada 20K in RRSP/Savings, taxable income 80k/y
House: 300K under my wife's name.

I often transfer cash between my account and my wife's account.

So in case I lost a 500K lawsuit, then I transfer all 100K to my wife account, and my house. Will the court take away

A the 100K + plus 300K house
B only 100K, because I just transfered to my wife
C 50k cash + 50% of the house
D 100K cash + 50% of the house
E nothing, because there is no asset under my name

If I have less than the lawsuit amount, will I be put in jail? or just file bankruptcy?

http://www.rushforth.net/assetpro.html

7.1 Division of Assets between Spouses: If one spouse has a high exposure to potential liability because of his or her occupation or business, it may be advisable to divide the couples
Deal Fanatic
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May 1, 2003
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that junk you quoted up there is US law and has zero bearing in Canada.
Deal Addict
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Apr 9, 2004
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why don't you just get insurance? assuming your job is a professional one...

Then on your contract, just put a disclaimer saying you are only liable up to the price the insurance company will pay out.
Deal Expert
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Jun 14, 2003
23140 posts
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1. I think you need a lawyer.
2. You should incorporate your company and get insurance.
3. The court will not take anything away from you right the way. It will say you (or your company) need to pay $N to somebody. You will need to pay $N to that person. If you don't have $N, you will pay that for the rest of your life. Or, you will need to declare bankrupcy. When you declare bankrupcy, you need to check how bankrupcy deals with your money/asset/house, etc.
4. If your company is incoporate, the max. the company will pay is everything the company owns and it can be shut down (the end of its life).
Banned
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Dec 24, 2004
10708 posts
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hint: some US banks don't do credit checks when opening an account. You could drive to the states, go to a branch thats just across the border, and open a basic checking account with a Visa ATM check card. Since they don't do a credit check, nobody in Canada will know you have an account in the USA.
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