Family Offices

When the question of preserving the capital of a certain family is raised, family offices are often mentioned. The core purpose of family offices is providing services related to the management of any family assets. Their services are usually available for individuals who have at least $1 million in liquid assets. They are in charge of multiple tasks, including investment management, legal support and tax advice, transfer of ownership of a business by inheritance, and other more personal issues.

Family Offices explained

Family office is also referred to as the "brain" of the family, which coordinates the work of the business from the inside, sees the entire financial picture, and also works with third-party individuals, companies and banks to make their customers' lives more comfortable. In the U.S., wealthy families can afford to maintain a family office.

Specialists in family offices can recommend the most suitable structures to store assets of the family, for example, domestic and international trusts or foundations. Family offices also cover non-financial challenges that wealthy people often do not have time for, such as life insurance, visa support, selection of educational courses, schools, universities, art banking, travel planning and fulfillment, as well as a wide range of lifestyle services.

Historically, two types of family offices existed: a single-family office and a multi-family office. The single-family office serves only one family. The family itself tends to set up a single family office. The first family offices created in the USA belonged to this type of office. 

In today’s world, the most common type is the multifamily office.They serve several families at the same time. This is influenced by an increase in demand and in the number of high-net-worth individuals. As a rule, such institutions are characterized by a very broad range of activities, since different clients have different needs. For instance, while serving one client, it’s important to assemble a group of high caliber specialists. By contrast, the other client may be interested only in lifestyle advisory services.

Operation of Family Offices 

The team of professionals that meets the complex needs of a client is the key to the further development of any family office. Usually the team of professionals includes a lawyer, a trader or a portfolio manager, an insurance specialist, an infrastructure specialist (who specializes in maintaining technological infrastructure systems), an accountant. In recent years, a lifestyle and art specialist, as well as a charity project manager, are also in high demand. 

Such organizations often focus on wealth management services applying an integrative approach. They pay special attention to handling financial issues — taxation, accounting, asset management, financial planning, etc.

Estate and legacy planning

Family offices combine various specialists that protect and multiply family wealth from generation to generation, ensuring the security of property, protecting family assets from inheritance taxes, and preventing problems that occur while dealing with estate laws. While planning for wealth transfers between generations, family offices should cover the following questions: How to transfer ownership and control of a business to new management? How to appoint a new trustee to ensure the proper administration of the family trust? 

In addition to this, having family members involved in financial affairs results in the reduction of the conflicts between generations, which is one of the advantages of such offices.