Trusts, Funds and Foundations
Family Office
A Family Office provides administrative, logistical, and advisory support to families requiring assistance with their financial and business affairs. Many Family Offices start small, usually to address a pressing wealth management need, and over time they can grow to accommodate other services the family requires to optimize its affairs. The office with its administrative team can either be dedicated to the affairs of one family or certain duties and responsibilities can be outsourced to specialist providers and advisors.
Effective family wealth management encompasses a range of issues related to business aims and personal and family goals. Wealthy families often consider establishing a family office to manage their many investments, reporting, philanthropic, and financial planning responsibilities. Properly structuring and staffing a family office requires an analysis of tax and governance considerations, juxtaposed with a thorough understanding of the family's short and long-range business and professional goals and objectives. To this end and by way of example, moving wealth to trusts for the benefit of spouses and/or children—even during one's lifetime—can have significant estate tax planning benefits and can protect the specific assets (and appreciation) not only from estate taxes but also from creditors. When properly drafted, Trusts (link to section on Trusts) can provide effective and ongoing protection for the assets of the family with very flexible investment and distribution options.
Every family that has accumulated significant wealth should consider integrating current and future planning strategies utilizing trusts. Trusts have been time-tested like no other risk management tool. However, not every trust provides optimum risk management protection. Specific provisions and terms are required to insulate the assets contained therein from claims of creditors. In addition, increased mobility among high net-worth individuals and families has coincided with the broad expansion of a globally integrated economy — featuring greater cross-border trade and investment — to create an increasingly complex range of global tax issues.
MOST COMMON FORMS OF FAMILY OFFICE
The Single Family Office
Set up, owned, and managed for one family. The original and most expensive model, favored by the most wealthy and globally active families.
The Multi-Family Office
Serves more than one family, with the families usually linked commercially or by common values. Easier to attain economies of scale, so costs can therefore be shared more broadly, and it may be easier to hire and retain top professionals
Commercial Family Office Providers
Businesses specialising in the provision of Family Office services - usually private banks, wealth management firms and high calibre professionals.
Family Offices are not generally profit centers; therefore, the costs have to be weighed against the benefits. "Protection" usually features in a family's immediate driving needs to establish the office - protection from taxes, the effects of the patriarch's eventual demise, dissipation of wealth by family members, or from political and external threats. However, the total costs of maintaining an office can also be mitigated by other savings and services that the family office will deliver. Therefore, the viability is determined more by the family and the value it attaches to the solutions for the immediate problems it faces.
