Identifying the Exposure and Managing the Risk

Case Study No. 1

Both the Jones and the Smiths are successful entrepreneurs that conduct their business through their companies.

The Jones Family

Shareholders

Mr. Jones
Mrs. Jones

Company Retained Earnings

$2.5M

No Individual Pension Plan

Retirement Planning

Mr. and Mrs. Jones will retire on the dividends declared by the company from its retained earnings.

Exposure

$2.5M

The retained earnings of the company, and the shares of the shareholders. are subject to attachment by their respective unsecured creditors; the exposure.

Option for The Jones Family

Joint Spousal Trust to protect the shares of the company owned by Mr. and Mrs. Jones, they are 65 years of age.

The Smith Family

Shareholders

Mr. Smith
Mrs. Smith

Individual Pension Plan

$2.5M

No Retained Earnings

Retirement Planning

Mr. and Mrs. Smith will draw a periodic pension from their Individual Pension Plan.

Exposure

$0

Registered pension plans are protected by law and are not subject to attachment by their respective unsecured creditors. No Exposure.