【Asset Protection Function — Debt Isolation Trust for Business Owners’ Families】

Mr. Wu operates a small garment factory.
His family assets include a factory building (valued at RMB 8 million, pledged for business loans),
a private residence (valued at RMB 6 million), and RMB 4 million in financial assets.
Recently, due to a decline in orders, his business is under pressure from RMB 10 million in outstanding loans.
He is concerned that if the business cannot repay the debt,
his private residence and personal savings might be used to settle liabilities,
which would impact the basic living needs of his wife (a full-time homemaker) and his 10-year-old daughter.

To address this, Mr. Wu transferred the private residence and RMB 3 million in financial assets into a family trust.
He retained RMB 1 million as liquid funds, along with the factory building (for continued business operations).
Under the terms of the trust:
– The private residence is held in trust ownership (not Mr. Wu’s personal asset),
and his wife and daughter have the permanent right to reside there.
– RMB 20,000 is disbursed monthly from the income generated by the trust assets to cover basic family living expenses, paid directly to his wife.
– Educational and medical expenses for the daughter and other family members can be reimbursed from the trust upon submission of supporting documents.

In the event of business bankruptcy, the trust assets are legally segregated from the company’s debts,
and will not be subject to creditor claims.
The trust continues to safeguard the family’s living arrangements and financial needs.

Through the use of a Family Trust, Mr. Wu achieves clear segregation between business and personal assets.

Debt Risk Isolation
Trust assets are legally independent from Mr. Wu’s personal and business liabilities.
Even in the event of corporate bankruptcy, the family retains secure housing and a minimum standard of living.

Living Safety Net for the Family
Regardless of the business performance, the trust ensures the wife and daughter’s essential needs for residence, education, and healthcare are met.

Peace of Mind for Business Operations
The trust alleviates concerns about family assets being used to repay business debt,
allowing Mr. Wu to focus on business transformation without distractions.