Family office structures offer a set of bespoke services that help to protect a family’s wealth and manage its investments, assets, residences and businesses, all via a single administrative point. A family office can safeguard wealth both now and for future generations. However, there are some key considerations when setting up this provision.
The Objective of the Family Office
As part of the process of setting up a family office, it’s important to consider the overall objective of this office and identify which individuals will be responsible for making decisions, how this decision-making will take place and the way the process will be managed.
The Scope of the Family Office
Family members and their partners will need to agree on factors including the size, cost, location, benefits and scope of either a new family office or one that’s already in existence. Other elements to consider are, for example, whether charitable foundations should be taken into account, where the management of assets should take place, and the jurisdiction that’s preferable in terms of regulations, tax and security.
The Services and Skills Needed
Succession planning experts such as Edgar Paltzer know that as part of the setting up process, it’s advisable to think about what services are currently outsourced and whether this continues to be the best option or if it would be better to bring them under the management of the family office. Affluent families often instruct the services of professional firms regarding, for example, tax services and accountancy; many also retain consultants, legal advisors and security service providers.
Future Decisions Made by the Family Office
Decision-making, succession and leadership issues are a key challenge regarding preserving and growing family wealth. When setting up a family office, it’s vital to consider how intergenerational differences will be handled and the role that different family members will play. It’s also important to think about how future conflicts will be resolved.
Choosing a Family Office Service
If a family decides to instruct a firm to run their family office, it’s crucial to choose a provider that has experience in managing a family’s assets and investments and that can provide corporate and family governance for its estate. A family may also want to select a firm that can provide advice on succession planning, wealth structuring and philanthropy that is flexible enough to keep pace with a fast-changing world.
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