Family Bank – a family-funded company that provides funds only to family members or family assets – is one mechanism to achieve this goal. It uses family resources for the benefit of all the family members involved. You can also look for UBS Global family office through various online sources.
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Elderly family members provide funds to the family bank that finances the interests of the next generation of members, businesses, education, housing, and other assets. Young family members should also be encouraged to invest small amounts of their own.
With professional and democratic design and management, this structure can enable members of the next generation to build wealth responsibly while pursuing their own interests and passions.
Importance of family banks
–Professionalization of family financing: Too often, family loans are informal, emotional decisions that ultimately lead to tax liability and disrupt family harmony. The professionalism of family banks can support avoiding tax mistakes, drawing emotion from transactions, and avoiding potentially unhealthy family dynamics.
–Offer flexible terms: According to the tax code, family banks can offer more flexible terms than commercial banks; however, the interest rate must be equal to or above the applicable federal interest rate (AFR).
The terms of the loan must be consistent with the bank's values, mission, goals, and policies. All policies and financing must be properly reviewed and documented by tax advisors and real estate planning advisors