When it comes to the family business, not all children of business owners are interested in pursuing the same career path. That doesn’t mean they aren’t interested in business at all, writes financial adviser Josh Patrick on the NYTimes.com blog, “You’re the Boss.”
One alternative is the concept known as the “family bank.” It’s not a real bank, Patrick writes , but “an informal arrangement where parents or grandparents form a trust that is used to foster responsible money behaviors in a family.”
Business owners often worry about spoiling their children. They don’t want them living off their parents’ wealth and not making their own way in the world. Thomas J. Stanley, the author of The Millionaire Next Door, says the best things you can do for your children are to provide an excellent education and the opportunity to own a business. Warren E. Buffett has been quoted as saying, “A very rich person should leave his kids enough to do anything but not enough to do nothing.” A family bank is a good solution for this problem. Instead of giving money to children or grandchildren, the family can loan money to be used in ways that will help make the children more successful and independent.
Read full blog post: “An Alternative to the Family Business: The Family Bank” (NYTimes.com You’re the Boss blog)