How Incorporating in British Columbia Protects Your Personal Assets
How Does the BC Business Corporations Act Create the Corporate Veil?
The Business Corporations Act (British Columbia) recognizes a corporation as a separate legal person at law. The corporation contracts in its own name, owes its own debts, and is the only entity creditors of the business can pursue absent a guarantee. Shareholders' personal property remains generally insulated.
Why Are TFSAs Not Protected from Creditors in British Columbia?
British Columbia has not extended statutory creditor protection to TFSAs. A BC resident with a substantial TFSA balance faces seizure in personal bankruptcy. Layered planning using segregated funds with named family class beneficiaries, or transferring investment dollars into permanent life insurance, can fill the gap.
What Director Liability Survives BC Incorporation?
BC directors remain personally liable for unpaid HST/GST, source deductions, and employee wages under federal and provincial law. The Business Corporations Act imposes additional director duties whose breach can produce personal exposure. Monitor these specific liability categories actively.
How Does BC Estate Planning Intersect with Asset Protection?
BC's Wills, Estates and Succession Act (WESA) and its variation of wills provisions create unique planning considerations. Alter ego trusts and joint partner trusts (available to BC residents aged 65 or older) can both protect assets from future creditors and reduce wills variation risk by passing property outside the estate entirely.
British Columbia does not protect TFSAs from creditors. A BC resident with significant TFSA holdings should consider redirecting future contributions into structures that do enjoy provincial creditor protection.
Common Questions for British Columbia
Should I incorporate in BC or federally for better asset protection?+
Both forms offer equivalent corporate veil protection. The choice is mainly administrative: federal incorporation provides nationwide name protection; BC incorporation is simpler if you operate only in the province.
Are BC RRSPs protected from creditors?+
Yes. RRSPs are exempt from creditor seizure under the federal Bankruptcy and Insolvency Act in BC, with the standard twelve-month contribution clawback.
Is the BC corporate veil ever pierced?+
Only in narrow circumstances involving fraud, sham, or the corporation acting as a mere instrumentality. Properly maintained BC corporations almost never have the veil pierced.
Can I use an alter ego trust in BC for asset protection?+
Yes, if you are 65 or older. The alter ego trust transfers property on a tax-deferred rollover, places it beyond creditors, and avoids both probate and wills variation under WESA.
Does BC's Family Law Act affect my asset protection planning?+
Yes. BC's Family Law Act governs equalization on relationship breakdown. A properly executed marriage contract or cohabitation agreement can exclude specific assets from property division.