Are Asset Protection Trusts a Mirage?

A person's patrimony stands as collateral for all the person's creditors, but the Quebec legislator broke away from the classical conception of a single patrimony when it introduced rules for a trust that allowed the creation of a patrimony by appropriation. The settlor can be named as both joint trustee and beneficiary without possessing a real right to the property. This constitutes, a priori, a patrimony sheltered from the settlor's creditors, generally called an "asset protection trust". Since the introduction of the patrimony by appropriation in 1994, Quebec courts have found that its goal of protecting a debtor from creditors contradicts some axiomatic principles of civil law, which must take precedence over the validity of the patrimony by appropriation. In fact, the courts have not hesitated to annul asset protection trusts designed to protect assets from the settlor's creditors. The asset protection trusts is simply a mirage.