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When a considerable amount of wealth is created, it can produce some new challenges as well as new opportunities for people as they adjust to the additional complexities that are present in this new world. One of the most common challenges facing families with newly acquired wealth is balancing the desire to ensure that the wealth is preserved for future generations and the ambitions of the current generation. A family office can be a “holistic full-balance-sheet wealth management solution” for prosperous individuals and their families.

Family offices have been around for some time, but they have become more prevalent since the start of this century. Family offices, like families, differ considerably with each having a varied family specific service package.  This in itself makes it difficult to define exactly what a family office is.

A family office can be multi-family or single-family. A multi-family office can support several affluent families, whereby a single-family office only supports one. A multi-family office is considered a body established to ensure that there is a formal plan to manage their wealth for their families’ financial future, in addition to providing other services for the individual family members.

Single family offices are far more diverse in size and structure, and this often depends upon the family members as well as their actual wealth. A single-family office could simply provide investment services or provide a much broader range of services with a much larger team to handle the diverse needs of a large, multi-generational family. Many single-family offices are created when the family business is sold and there is suddenly a large amount of investable funds.  It is important to create a set of rules and policies within which the family will need to operate.  This is often taken care of in legal tax advice, and the implementation of estate and succession planning for a smooth transfer and preservation of assets for the next generation.

Essentially what is being offered by both the single and multi-family offices is a full balance sheet financial management solution for people with an excessively high net worth. This in itself requires a bespoke approach in order to meet the needs and desires of very diverse and dissimilar family offices. The family office is not only focused on managing the family assets, but in addition is responsible for preserving and growing that wealth over generations, and safeguarding the family values.

Making the decision to form a family office is a big step, yet more and more wealthy people have made this move in recent years, taking a more hands-on approach over investment policy decisions. In an era of increasing risk, investment fraud and cybercrime more people are adopting an institutional approach to risk management. In practice, the flexibility of a family office is where it often goes wrong, as there is not a set framework of services to be provided. Sometimes not enough thought is put into what the family office will provide to the family once established, so it is important to plan right from the start, and seek professional advice.

The complexities involved in this particular type of tax advice mean that it is important to seek a team proficient in their complete understanding of the process and its drawbacks in order to ensure that the best outcome is achieved.  At LEXeFISCAL, you are guaranteed the quality of care to ensure that your family office is planned to provide the future investment potential and security you require to protect your assets and future growth.