【Business Risk Isolation Trust: A “Safe Haven” for Entrepreneurs】

Mr. Zhou runs a neighborhood supermarket with an annual income of around RMB 300,000. His family assets include the business rights to the supermarket (valued at RMB 800,000), a residential home (worth RMB 3.5 million), and savings of RMB 1.2 million.

Concerned about the potential impact of market fluctuations or unexpected events—such as pandemics or fires—on his business, Mr. Zhou worries that operational losses could affect his family’s standard of living and his children's education. He hopes to separate part of his wealth from business risks and reserve it as a financial safety net for his family.

Mr. Zhou sets aside RMB 800,000 into a trust, retaining ownership of the supermarket, his residential home, and RMB 400,000 in liquid assets. The trust terms specify that the funds will be allocated to low-risk financial products such as bank wealth management plans and money market funds, with no participation in high-risk investments.

In the event that the supermarket operates at a loss for six consecutive months, the trust can provide monthly distributions of RMB 20,000 to support family living expenses, for up to 12 months. For emergencies such as a child’s education or major illness in the family, a one-time withdrawal (up to RMB 100,000) may be requested. Starting at age 50, Mr. Zhou will receive RMB 100,000 per year from the trust as retirement supplementation. If the business remains stable and no emergency distributions are needed, the remaining trust assets will be transferred to his children when he turns 60.

Building a Risk Buffer for Small Business Owners Through a Family Trust

Asset Segregation:
Trust assets are strictly separated from business assets. Even if the business incurs losses, the trust ensures that the family’s basic living needs are protected.

Emergency Trigger Mechanism:
The trust clearly defines when and how funds can be accessed in risk scenarios, preventing arbitrary use and ensuring the “safety net” fulfills its true purpose.

Flexible and Balanced Design:
It protects the family during times of business instability while also addressing long-term retirement planning and intergenerational inheritance—striking a balance between business and life.