Here are some guidelines for setting up a family…

Here are some guidelines for setting up a family bank. The family bank should not be a formal institution. It isn't a bank in the normal corporate sense. It is important that it be informal so that its activities remain private and so that it can evolve a system of governance that meets the unique circumstances of the family that creates it. The family bank must have formal rules for meetings. It should have officers, directors, and, if needed, advisory boards. It should have procedures for receiving and processing loan applications. That said, the rules and procedures will vary considerably, depending on who will fund the loans. The family bank must have a mission statement explaining its philosophy and reason for being. The lenders and borrowers must understand the family bank's purpose to be a high-risk, low-interest lender and the consequences of that policy. The bank's mission statement should also contain a values section incorporating the overall family mission statement and should explain how the bank will assist in carrying out that mission. Because family trusts are potential lenders and borrowers, it is particularly important that trustees understand and agree to participate in the family bank. Trustees' involvement in the family bank, as in so many other areas of family governance, points up the need for excellence in their selection. It is important to have concurrence of all family members, both lenders and borrowers, with the terms of the bank's mission statement. It is particularly important that all family members who agree to participate in the family bank be given copies of all loan applications. Personal financial data may be withheld for confidentiality, but all members should receive the intellectual capital portions of the applications.

— from The Flight Plan (Purpose/Wisdom/Risk) · Family Wealth: Keeping It In the Family: How Family Members and Their Advisers Preserve Hu

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