A chartered accountant has shared some simple rules that allow the rich to stay rich while the middle class risks losing everything. CA Nitin Kaushik took to social media platform X to explain that it’s not luck that allows rich people to protect their wealth, it is a structure used by them.
In his post, Kaushik explained that the middle class keeps everything in one place. “Salary goes into a personal account. Savings stay in the same account. Business income too. One financial shock and their entire life savings are at risk,” he said.
He explained that the rich manage their wealth differently, outlining six key ways in which the rich re-structure their earnings.
The first point outlined by Kaushik was about ownership and controlling the assets.
“They separate ownership from control. Your house is in your name and if you default, the bank can take it. Their house is in a trust or company….creditors can’t touch it. Same asset. Different outcome,” he highlighted.
According to Kaushik, private trusts are an “invisibility” shield for wealth protection.
“Settlor (you) creates a trust with family as beneficiaries. Assets (shares, property, investments) are transferred to trust. The trustee manages them. You can still control as trustee, but legally, you don’t “own” it anymore. If your business fails….creditors can’t seize trust assets,” he noted.
The CA explained that the rich people also take the advantage of holding companies for their asset management.