Multi-Generational Investing & Finance

[bingybear]

I am not able to read the article behind your link. It requires a subscription.

Interesting. If I click the link from the google search results it gives me the page in full. If I click the same link from my post it shows a small amount and requests sign in.

 

[target2019]

Eventually I found my way to the article, and remembered skimming through it earlier in the day.

Much that I've read on this subject is discussing the concept from the perspective of wealthy individuals. We are far from that.

This is a work in progress, not a trust. It consists solely of gifts from one child, and our own contributions. Since parents' names are on the account, it is legally just an account we own. Taxes are paid by us. If we die today, it is part of the pile, subject to whatever taxes may apply.

 

[target2019]

Re-visited this thread and found I had not reported on 2017 performance. Here goes:

14.16% Calculated XIRR 2017
18.02% Calculated XIRR 2016

Also adding a few links for additional reading on the subject "Family Bank."
Valuables: The Family Bank – A “Sound” Idea -
THE FAMILY BANK Educating & Inspiring Multi-Generational Family Members through a Shared Investment Structure | Pitcairn
The Family Bank: A Strategy for Preserving Wealth

1) Small investment in FOXA has become interesting. It will split into new FOX and DISNEY. Also, the NAV has gone up "a bunch."
2) Auto loan is now closed. Next loan will be for a roof replacement.
3) Cash is a problem (too much) in that the interest rate is very low in a brokerage and in checking. Would be nice to have something like an online savings bank (with higher interest) sitting in the brokerage. Guess everyone has this problem.

 

[marko]

FWIW I think you're making a lot of work for yourself on what most of us here call basic money and investment management.

I guess you could call it a family bank if you want but AFAIK, unless it's spelled out legally within a trust, it really isn't.

Reminds me of a friend who politely replied that he works "at the family office" and someone asked "Oh, is it in town?"

 

[target2019]

FWIW I think you're making a lot of work for yourself on what most of us here call basic money and investment management.

I guess you could call it a family bank if you want but AFAIK, unless it's spelled out legally within a trust, it really isn't.

Reminds me of a friend who politely replied that he works "at the family office" and someone asked "Oh, is it in town?"

I estimate maybe an hour's time has gone into this in 2018. Downloaded transactions for 2017, posted above, bought some SCHD earlier in the year.

Too early to spend money on establishing a trust. It's a family bank, lol.

I don't understand your last sentence.

 

[marko]

I don't understand your last sentence.

That is kind of my point.

A 'family office' isn't an office somewhere. It's how UHNW people manage their investments, philanthropy and so on.

 

[OldShooter]

Sounds like an extreme example of Richard Thaler's mental accounting (https://en.wikipedia.org/wiki/Mental_accounting) to me. We all do it to some extent, I guess, so if your scheme makes you happy that's really all that is needed. Just be careful that the complexity doesn't lead you somewhere that turns out to be stupid.

 

[OldShooter]

... A 'family office' isn't an office somewhere. It's how UHNW people manage their investments, philanthropy and so on.

Not necessarily true. Many family offices are actual offices with paid staff. I have a friend that runs one, working for two very rich partners. It's a great gig. He works a month a year from his family summer home on the ocean 1000 miles away.

In fact, to me the phrase "family office" has always implied a physical office. YMMV.

 

[target2019]

Have read some more on "UHNW" and "family office". I am not UHNW and don't have a family office. Hope that answers some questions.

 

[marko]

Not necessarily true. Many family offices are actual offices with paid staff. I have a friend that runs one, working for two very rich partners. It's a great gig. He works a month a year from his family summer home on the ocean 1000 miles away.

In fact, to me the phrase "family office" has always implied a physical office. YMMV.

Exactly. The family themselves dont have an office that they go to.
My experience though is where one of family members oversees the pros from time to time.
They say things like "...the office suggests that we consider X as a charity..." and use "trust" and "office" interchangeably

 

[OldShooter]

Exactly. The family themselves dont have an office that they go to. ...

This is kind of a silly and peripheral discussion, but it is very common for the "family," particularly the senior folks to have physical offices in the family office and use them for whatever business comes up. They don't want to be inviting business associates to their homes. Other family members may use the space as well. I'm done now.

 

[Souschef]

I have an interesting situation. I have a TOD account with both my sons a beneficiaries.
One son is trying to buy a home, and needs a down payment. My proposal to him was I would give him his half now, and change the beneficiary to 100% for my other son. Thankfully we do not need the money.

 

[marko]

This is kind of a silly and peripheral discussion, but it is very common for the "family," particularly the senior folks to have physical offices in the family office and use them for whatever business comes up. They don't want to be inviting business associates to their homes. Other family members may use the space as well. I'm done now.

Right.
I'm done as well but I suspect we may be talking about two different things.
Let's move on!

 

[target2019]

I have an interesting situation. I have a TOD account with both my sons a beneficiaries.
One son is trying to buy a home, and needs a down payment. My proposal to him was I would give him his half now, and change the beneficiary to 100% for my other son. Thankfully we do not need the money.

That answers a similar question I have thought may come up in the future for us. When I started this thread, it was not something I had considered.

Some time later, I realized the family bank (maybe I should change the name) also gives us a concise way to answer requests for gifts or loans, just as your TOD does. I'll have to consider in the future whether to go TOD status, leave as is, or formalize as a trust.

 

[pb4uski]

Sounds like an extreme example of Richard Thaler's mental accounting (https://en.wikipedia.org/wiki/Mental_accounting) to me. We all do it to some extent, I guess, so if your scheme makes you happy that's really all that is needed. Just be careful that the complexity doesn't lead you somewhere that turns out to be stupid.

+1 really no different from making a loan to a family member, but arguably with more thought behind it and paperwork.

For OP, what is the legal title to these accounts?

If they are under your or your DW's TIN, then it is just mental accounting for your personal assets... but if your prefer to think of it as a "family bank" then by all means... enjoy!

 

[target2019]

Re-visited this thread and found I had not reported on 2017 performance. Here goes:

14.16% Calculated XIRR 2017
18.02% Calculated XIRR 2016

Just put in my annual 1 hour time on this project.

14.80% Calculated XIRR 2018

If nothing else, this keeps me on my toes with XIRR function.