Family trusts and wealth preservation trusts
A trust is an entity defined in the Civil code of Quebec which, although not having complete juridical personality, enjoys many of its attributes, notably an autonomous patrimony distinct of any of the trust actors, whether it be the settlor, the trustees or the beneficiaries.
Essentially, there are three actors in a trust: the settlor, the trustees and the beneficiaries.
The role of the settlor is essentially limited to the donation of property (usually non-income-producing property with nominal value) to the trust expressing the intention that the trustees hold legal title to the property for the benefit of other persons (the beneficiaries). The settlor usually has no further role in connection with the trust or the trust property after the trust is settled. The settlor must be neither a beneficiary of the trust nor susceptible to becoming one. Usually, a family friend will act as settlor. In the specific case of an asset protection trust, the settlor shall be the person wishing to transfer a part of his(her) patrimony in the trust for asset protection purposes.
The trustees manage the affairs of the trust and decide of any distributions of its revenues and/or capital at their discretion. A trustee may not act alone as such if he is also a beneficiary of the trust. A second trustee, who is not a beneficiary of the trust, must therefore be chosen.
As for the beneficiaries, they are entitled to receive revenue and/or capital distributions from the trust at the trustees' discretion. The beneficiaries will usually be the entrepreneur, members of his(her) immediate family as well as any other person, company, trust, charity, etc. that he(she) wishes to be designated as such in the trust deed. It is also possible to designate additional beneficiaries after the trust is settled. This is done through an election mecanism for which an elector is designated in the trust deed. However, these elected beneficiaries must be specifically provided for in the trust deed either directly of indirectly, i.e. chosen from a defined category of persons such as the ascendants or descendants of any beneficiary. In the specific case of an asset protection trust, the person having transferred a part of his(her) patrimony in the trust for asset protection purposes will usually be the only beneficiary of the trust.