Can I Protect My House by Putting It in a Trust or My Spouse's Name?

No — not in the way most people mean it, and not for the price most people are willing to pay to find out. A house moved into a trust, a spouse's name, or a corporation once a lawsuit is foreseeable can be unwound by a court under fraudulent conveyance law, which exists in every Canadian province. A trust where you remain trustee or beneficiary protects little, because courts look at who actually controls the asset, not whose name is on the paperwork. And since 2017, most personal trusts that do hold a house have lost the ability to claim the principal residence exemption at all — a real tax cost, paid whether or not the creditor-protection plan even works.

This is not a caution against structuring your affairs. It's a caution against structuring them for the wrong problem. Here is what each of these tools actually does, what it costs, and why a liability policy bought today does something none of them can: work before there is a claim to defeat.

This page explains the general legal landscape and is not legal or tax advice. Trust, incorporation, and estate structuring decisions depend on your specific facts and province, and belong in front of a lawyer or accountant — not a website.

Can putting my house in a trust protect it from a lawsuit?#

Usually not, for one reason: the legal test for creditor protection is control, not labels. If you are the trustee, if you are a beneficiary who can receive the property back, or if you can revoke or amend the trust, courts generally treat the house as still economically yours — because it is. A trust that protects nothing from creditors while you're alive to control it is not a rare edge case; it's the default outcome of the kind of trust most people can actually afford to set up.

Genuine asset-protection trusts exist, but they typically require giving up control entirely to an independent trustee, are set up years before any risk materializes, and are the kind of structure built for business owners and high-net-worth estates with professional legal teams — not a homeowner reacting to a scary Reddit thread the week a dispute starts.

What is fraudulent conveyance, and why does timing matter more than paperwork?#

Fraudulent conveyance law lets a court reverse a property transfer made to defeat a creditor — and "defeat" doesn't require a lawsuit to already be filed. Ontario's Fraudulent Conveyances Act is one example (every province has equivalent legislation), and it targets transfers made with intent to put assets beyond the reach of "creditors or others," a phrase courts have read broadly.

The timing question courts actually ask is closer to: was a claim reasonably foreseeable when you moved the asset? A transfer made years before any dispute, for ordinary estate-planning reasons, looks nothing like one made the week after a collision or an incident on your property. If a court concludes the second kind of transfer was made to dodge a specific, foreseeable claim, it can be declared void — meaning the house is treated, for enforcement purposes, as if it never left your name. You've paid land transfer tax and legal fees for a plan that a judge can erase in an afternoon.

Does transferring the house to my spouse actually protect it?#

Only if it happened long before any risk existed, and even then, only partly. A transfer made after a claim is foreseeable faces the same fraudulent conveyance exposure described above, regardless of whose name receives it. And a transfer motivated by a specific lawsuit creates a second problem entirely unrelated to creditors: it's now a marital asset move, and if the marriage doesn't survive the stress of the lawsuit either, family law can revisit a transfer made under those circumstances on separation. You can end up with neither the creditor protection you wanted nor the ownership certainty you started with.

Are RRSPs really protected from lawsuits?#

Partially, and the protection is narrower than the internet's shorthand suggests. Federal law (the Bankruptcy and Insolvency Act) exempts RRSPs and RRIFs from seizure specifically inside a formal bankruptcy, with one carve-out: contributions made in roughly the 12 months before bankruptcy can be clawed back and paid to creditors. That's a bankruptcy rule, not a blanket "RRSPs can't be touched" shield — outside a bankruptcy filing, provincial law governs whether a judgment creditor can otherwise reach registered savings, and it varies.

What has no equivalent protection at all: TFSAs and non-registered investment accounts. People who hear "my RRSP is safe" sometimes generalize it to their whole portfolio. It doesn't generalize.

What happens to the principal residence exemption if I move the house into a trust?#

You very likely lose it — which means a home that would have sold tax-free under the ordinary principal residence rule can become subject to capital gains tax once it's held inside a trust. Since a 2017 federal tax change, only a short list of trust types can claim the principal residence exemption at all — mainly trusts for a beneficiary who qualifies for the disability tax credit, and trusts holding property for the minor children of deceased parents. Ordinary asset-protection or "just in case" trusts are not on that list.

Practically: moving into a trust structure often means (a) a deemed disposition at the time of transfer, which can itself trigger tax, and (b) losing the exemption going forward on a gain that used to be entirely tax-free. That's a real, ongoing cost — not a hypothetical one — layered on top of a creditor-protection plan that may not even work.

What about land transfer tax and probate — does restructuring at least save money there?#

Land transfer tax applies in most provinces whenever title changes hands, and transfers into a trust or to a spouse are not automatically exempt — some provinces offer narrow exemptions for spousal transfers specifically, but a transfer into a trust for asset-protection purposes is a different transaction and usually doesn't qualify. Probate-fee reduction is a separate, legitimate reason people restructure ownership — but it's an estate-planning goal, not a creditor-protection one, and conflating the two is exactly how people end up paying legal and tax costs for protection they didn't actually get.

Does incorporating and holding the house in a company help?#

Generally no, for the ordinary family home, and it creates its own tax problem: a corporation letting you live in a house it owns rent-free typically creates a taxable shareholder benefit, because personal use of a corporate asset is treated as income to you. The corporation also can't claim the principal residence exemption at all — it's not an individual. And a judgment against you personally can usually still reach the shares you hold in the corporation, which is the thing that actually has value. Corporate structuring has real uses for business liability; sheltering a house you live in from a personal injury judgment is not typically one of them.

So what actually works before there is a judgment?#

Enough liability coverage that no plausible judgment gets past your policy limit. This is the argument-against-interest part: if your current limit is genuinely large enough for your assets and income, you don't need to buy anything, structure anything, or read the rest of this page again. Check your declarations page first.

If it isn't large enough, a personal umbrella or excess liability policy sits above your home and auto coverage and adds $1 million to $10 million of protection. Typical Canadian broker pricing runs roughly $200–$300 a year for the first $1 million and about $50–$75 a year for each additional million — estimates, not quotes — so $5 million of coverage lands around $400–$600 a year. Compare that to a single hour of a trust or estate lawyer's time, which commonly costs more than that on its own, before any structure is actually built.

The structural difference is the one that matters most: insurance is a promise made before anything happens. A trust built after a claim looks like what it is to a judge. A policy bought years earlier is simply the policy that was already there.

The bottom line#

If you've been Googling trusts, spousal transfers, or incorporation because a lawsuit feels possible, the honest answer is that the tool you're reaching for mostly doesn't do what you hope, and the one that does is cheaper than the legal fees for the alternative. Read your home and auto declarations pages, find your liability limit, and compare it to what you actually have to lose — home equity, savings, and future income all included. That comparison, not a trust deed, is the real asset-protection plan for an ordinary Canadian household.

None of this is legal or tax advice, and structuring decisions for a specific estate, business, or family situation should go through a lawyer or accountant who can look at your actual facts.