We are all tired of hearing of finance company and other business collapses.
To rub salt into an investor's wound – what often emerges from these cases is the news that the directors are not personally financially affected to any large degree. There are reasons for this. These people have taken the time and trouble to consult lawyers and put in place asset and estate plans, usually involving trusts, that among other things insulate them personally from the impact of their own business failing. By transferring assets into a trust, an individual can protect his/her assets from potential claims by creditors. There is nothing illegal in this if done properly, in a timely way, and not done to defraud one's creditors.
Think of it as insurance. We think it prudent to insure our cars and homes – even our incomes and health and lives. While there are always ongoing costs in establishing and maintaining such insurance, we are very grateful to have the benefit of it if misfortune strikes.
Prudent estate and asset planning can be viewed as insuring your personal assets against business risk. There are additional benefits to such planning including insuring your family and family assets against the risks posed by spendthrift children, or the risk of their partners claiming a share of your hard-earned inheritance assets, the maintenance of children or grandchildren suffering disabilities and protection against user pay charges.
So next time you are wondering how the latest "name" can retain his million dollar house and Ferrari despite the collapse of his business, remember he just took the trouble to reorganise ownership of his assets.