Social Distancing Your Wealth

by Eduan Botha


Social Distancing

There has been a lot of talk recently about the term “Social Distancing”. It went from a phrase the general public never used to one that is used daily. We on the other hand, have been using this principle for decades and at its core is what we teach daily.

Social Distancing is when you remove yourself out of situations where you may be at risk of infection. You isolate yourself to minimize or even extinguish your exposure to the bad elements that may harm you.

This is exactly the same principle we use when we separate your assets from your liabilities in your trust structure. We isolate your trust health from the risk component. It seems as if our clients do not always grasp the reason why we structure things in the way that we do, we do it to limit your exposure.

 

Limiting Contagion

The contagion effect can be used to explain how an economic crisis spreads, even domestically. When a shock occurs to the country's economy, it spreads right down to the individual. It can be explained by this example: When a global crisis occurs such as our current pandemic, there is a panic at the various stock markets. There is a lot of mechanisms and occurrences going on in the background, but what you should know is that this essentially wipes the value of companies, further compounded by the fact that the company is running at reduced capacity/operations due to social distancing.

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