The Benefits of Bank of Mum & Dad (BOMAD) Trusts for Family Wealth

The Benefits of Bank of Mum & Dad (BOMAD) Trusts for Family Wealth

Unlock the Secrets of Smart Family Lending

Helping your children into home ownership can be one of the most generous and meaningful financial gifts you make. But without structure, that generosity can expose you and your family to unintended consequences. A BOMAD Trust gives you the opportunity to help now, and plan wisely: protecting the money, protecting fairness, and preserving your legacy.

What is a BOMAD Trust®?

A BOMAD Trust® is a targeted trust structure designed for parents who want to financially assist their child (or children) with a home deposit or similar support but also want to make sure that support is properly documented, safeguarded, and aligned with their broader legacy and family wealth objectives.

Here’s how it typically works:

  1. You establish a purpose-built trust (the BOMAD Trust).
  2. You as the parents, gift funds into the trust.
  3. The trust then loans the funds to your child (interest-free or interest-bearing, as you choose).
  4. The trust holds, manages and protects the funds until you pass control (or appointorship) to your child, or another event you define
  5. Trusts key objectives:
    • Keep those gifted/loaned funds outside your estate, helping to avoid future inheritance disputes.
    • Shield the funds from the child’s divorce, bankruptcy or other creditor risk.
    • Provide clarity and fairness across siblings, so one child’s support doesn’t inadvertently disadvantage another.

Why This Matters:

  • Without legal documentation, a gift might be treated as part of your estate, prompting claims by other children or causing imbalance.
  • If your child divorces in future, funds not properly documented or structured may be vulnerable to the spouse’s claims.
  • If your child’s creditors step in, unsecured funds may be exposed.
  • Stereo-typical ‘helping your child’ becomes the source of tension with other family members if it wasn’t documented thoughtfully.

A BOMAD Trust addresses these issues by:

  • Formalising the support (loan or gift) via legally drafted documents.
  • Allowing flexibility: you can choose to treat the funds purely as a gift (no interest, no repayment) or as a bona-fide loan (repayable, interest-bearing) depending on your wishes.
  • Offering options like “bloodline protection” (so only your direct descendants benefit) and “lockdown” or “non-lockdown” variants depending on how you want succession to play out.
  • Providing “set-and-forget” simplicity when structured correctly (in the case of interest-free loan, the trust might generate no income and require minimal ongoing tax reporting).

Is a BOMAD Trust® right for you?

A BOMAD Trust is generally a good fit if you:

  • Are considering helping one child (or children) with a meaningful amount of capital (for example, a house deposit).
  • Want to protect that money for future generations, rather than just turning it into an informal gift.
  • Want to keep the arrangement visible and fair across the family (so other children aren’t disadvantaged or unaware).
  • Are mindful of the risk of your child’s future divorce or creditor claims and want to ‘ring-fence’ your support.
  • Have sufficient wealth and estate-planning complexity that a formal structure of this nature makes sense.

At Cashflow Financial, we help families create smart strategies to support the next generation while protecting their legacy. If you’d like to discuss whether a BOMAD Trust® is right for your family, contact our team today for a no-obligation meeting.

At Cashflow Financial, we are here to help.