InKnowVision August 2013 HNW Technical PPT - Family Banks

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One of the common themes that we continue to see among our clients is the idea that leaving too much money to children will spoil them. InKnowVision often employs the family bank concept to help people understand how they can re-gain control in this complex area.

Join us as we look at this interesting concept and understand how to present it to clients, how to determine the client profile for this strategy and how to implement this type of planning.

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InKnowVision August 2013 HNW Technical PPT - Family Banks

  1. 1. S C O T T H A M I L T O N I N K N O W V I S I O N . C O M 8/21/2013Copyright 2013, InKnowVision, LLC Family Banks
  2. 2. Why Look At Family Banks 8/21/2013Copyright 2013, InKnowVision, LLC  Attorneys  Money Managers  Life Insurance  CPAs
  3. 3. What Kind of Inheritances Are There? 8/21/2013Copyright 2013, InKnowVision, LLC
  4. 4. 90 Day Inheritance 8/21/2013Copyright 2013, InKnowVision, LLC
  5. 5. 90 Day Inheritance 8/21/2013Copyright 2013, InKnowVision, LLC
  6. 6. Reliance Inheritance 8/21/2013Copyright 2013, InKnowVision, LLC
  7. 7. Family Banks 8/21/2013Copyright 2013, InKnowVision, LLC
  8. 8. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Are there important life lessons to share with family members?  Successes  Failures
  9. 9. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Do you hope to extend your family legacy through multiple generations?
  10. 10. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Are you concerned that your heirs are not yet prepared to handle the wealth you have accumulated?
  11. 11. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Have you built a net worth sizable enough to capitalize on opportunities and benefit from wealth regeneration?
  12. 12. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Are there enough individual family members so that together you could benefit from a broader exchange of ideas and a more formal decision-making process?
  13. 13. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Are you open to new ideas from your family members and accepting that their wealth regeneration strategies may differ from your own?
  14. 14. Why Use a Family Bank? 8/21/2013Copyright 2013, InKnowVision, LLC  Do your children, grandchildren etc. have entrepreneurial interests outside your core family business that should be encouraged and supported?
  15. 15. Why Use a Family Bank 8/21/2013Copyright 2013, InKnowVision, LLC  Good source of credit – friendly loan officer  Good terms  Fixed rates  No demand provisions  No excessive collateral (unless beneficial)  Less like a proctology exam
  16. 16. Steps to Success 8/21/2013Copyright 2013, InKnowVision, LLC  Have a clear family vision.  Determine mission and family “brand” before setting up a Family Bank.  Know how you want to be perceived by the community and extended family.  Be explicit about what you want to accomplish.
  17. 17. Steps to Success 8/21/2013Copyright 2013, InKnowVision, LLC  Well-Defined Participation Process.  Not all family members can be involved in management.  Be diligent in choosing who will manage.  Use an application and interview process that requires them to meet minimum age standards and demonstrate applicable education and/or skills.
  18. 18. Steps to Success 8/21/2013Copyright 2013, InKnowVision, LLC  Formal and predictable loan process  Applications  Appraisals  Credit checks  Standard loan terms and lending policies  Think through what failure to re-pay means
  19. 19. Steps to Success 8/21/2013Copyright 2013, InKnowVision, LLC  Evolving Leadership.  Consider term limits that rotate members in and out of family council positions.  This encourages:  Accountability and fresh thinking,  Allows younger family members to become involved, thus extending the success into future generations.
  20. 20. Steps to Success 8/21/2013Copyright 2013, InKnowVision, LLC  Formal Communications.  Passive family members don’t want to be in the dark.  Have a reporting structure was much like sharing corporate board minutes.  Managers should meet periodically  Managers should be transparent to all family members, who can have a forum to provide feedback.
  21. 21. Learning from Mistakes 8/21/2013Copyright 2013, InKnowVision, LLC  The wealth creator holds the reins too tight
  22. 22. Learning from Missteps 8/21/2013Copyright 2013, InKnowVision, LLC  Failure to include multiple generations
  23. 23. Learning from Missteps 8/21/2013Copyright 2013, InKnowVision, LLC  Dismissal of some viewpoints and an unwillingness to consider unorthodox thinking
  24. 24. Approaching Family Bank 8/21/2013Copyright 2013, InKnowVision, LLC  How long did it take to create your wealth?  How fast would you like to see it spent after you are gone?
  25. 25. 50 – 50 Option 8/21/2013Copyright 2013, InKnowVision, LLC
  26. 26. Family Bank Borrower/ Beneficiary Family Bank Borrower buys assets Loan 8/21/2013Copyright 2013, InKnowVision, LLC •Business •Houses •Education •Charitable
  27. 27. Family Bank 8/21/2013Copyright 2013, InKnowVision, LLC  Asset protection for assets collateralized by loans
  28. 28. Family Bank-Asset Protection Beneficiary Beneficiary's Net Worth? $0 Family Bank Beneficiary buys assets Loan 8/21/2013Copyright 2013, InKnowVision, LLC Assets pledged as collateral for loan
  29. 29. Structures for Family Banks 8/21/2013Copyright 2013, InKnowVision, LLC  ILITs  GDOTs  QPRTs  GRATs  Jurisdictional Trusts  LLCs, LPs
  30. 30. Assets To Fund Family Bank 8/21/2013Copyright 2013, InKnowVision, LLC  Exemption Gifts  Leveraged Gifts  Life Insurance  Family Business
  31. 31. Questions 8/21/2013Copyright 2013, InKnowVision, LLC

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