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ARTICLE · 24 JUNE 2026

Family Office Structuring: Considerations In Lender Model Planning

GGI | Global Alliance
GGI | Global Alliance
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High-net-worth families are restructuring their family offices using the Lender model to qualify as separate trades or businesses for federal tax purposes. This strategic shift enables them to deduct investment-related expenses that were eliminated for individuals under the Tax Cuts and Jobs Act, creating significant tax efficiency opportunities through carefully designed management entities and allocation structures.

United StatesTax
Robert H. Garner (Levenfeld Pearlstein, LLC)
Robert H. Garner (Levenfeld Pearlstein, LLC)
Adam S. Garber (Levenfeld Pearlstein, LLC)
Adam S. Garber (Levenfeld Pearlstein, LLC)
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Sophisticated high-net worth families are increasingly turning to Lender model planning to categorise their offices as a separate trade or business for US federal income tax purposes.

Why Lender model planning?

Lender model planning, grounded in the 2017 Tax Court case Lender Management v. Commissioner, provides a roadmap for when a family office crosses from managing its own wealth into operating as an investment management business. The economic objective is straightforward: Since the Tax Cuts and Jobs Act (TCJA) eliminated the deduction of most investment expenses incurred by individuals and trusts, structuring a family office as a bona fide trade or business has become an important tax-efficiency strategy.

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