【Cross-border Business Owner Debt Isolation via Trust】

Due to fluctuations in overseas orders, Mr. Chen’s company now has a debt-to-asset ratio of 75%. Under his personal name, he owns real estate in Shenzhen worth RMB 30 million, HK stocks valued at RMB 20 million, and bank deposits of RMB 10 million. His son has already obtained permanent residency in Canada. The major risks include: personal joint liability for RMB 32 million in business loans. Mr. Chen fears that if business operations go poorly, his properties could be subject to enforcement. Additionally, his children could face heavy estate taxes and foreign exchange controls when inheriting offshore assets.

During a window of healthy company financials, Mr. Chen injected RMB 12 million in post-tax dividends, along with a Vancouver villa valued at CAD 18 million, into a Cayman Islands VISTA trust structure.

Key components of the structure include:

• Cross-border transfer of domestic funds after filing with the foreign exchange bureau.

• In case of company bankruptcy, beneficiaries can only receive a basic living allowance (CAD 200,000/year) for the first three years.

• A "debt risk trigger clause": if Mr. Chen is involved in litigation due to personal guarantees, the trust automatically suspends distributions until the legal process is resolved.

• The Vancouver villa is held under the trust, and upon inheritance, it transfers directly under the protector's instruction—avoiding the 23% British Columbia estate tax.

By establishing a family trust, Mr. Chen effectively creates a risk firewall between business and personal wealth:

• Safe Asset Pool: Legally taxed funds and offshore entities block domestic debt claims.

• Dynamic Risk Control: Large distributions are frozen during corporate crises to prevent creditor recovery.

• Optimized Cross-border Inheritance: Offshore real estate avoids estate certification procedures and saves over CAD 4 million in taxes and fees.