After developing and growing your family business and investments, protecting and managing it as it continues to thrive becomes a top priority. One way to achieve this is through the use of a family office, which is is a team of professionals dedicated to managing the finances and investments of your family. This can include everything from providing legal advice and due diligence, managing trusts, recommending investments, to providing tax and estate planning. Below, we'll provide an overview of family offices and explain how you might benefit from a part time or full time set of advisors.
What is a Family Office?
A family office can be established by a family or a group of families who have developed a portfolio of investments or operate businesses and have grown to the point where their family becomes its own “business” and requires specialized attention. The primary goal of a family office is to provide comprehensive services that encompass all aspects of the family's financial life.
Types of Family Offices
There are two main types of family offices: single-family office and multi-family office. A single-family office is designed to manage the financial affairs of wealthy family. It's typically staffed by a team of financial professionals such as attorneys, accountants, investment managers, and trustees.On the other hand, a multi-family office, as the name suggests, provides financial services to multiple families. This type of family office is more common and can be more cost-effective, especially for families and can include a part-time, or “fractional” General Counsel and other executives in this category. The size and expertise of the team can expand and contract with the changing needs of the family or families organized in one group.
Benefits of a Family Office for Your Business
The primary benefit of a family office for your business is that it provides a consistent team, customized advising, and specialists that meet your individual needs. Family offices are particularly useful for business owners who may have complex financial structures, such as multiple business entities, that need to be carefully supervised and coordinated. Family offices can help with everything from real estate due diligence and structuring to succession planning and asset protection. Furthermore, family offices provide a comprehensive view of the family's overall financial situation, which can help with long-term planning.
Choosing the Right Family Office
Choosing the right advisors are an important decision and should be based on a variety of factors. One key factor is the specific areas of expertise of the team managing the family office. For example, if your family owns significant real estate assets, then you will need advisors with experience in that field. Another factor is cost. Family offices should be “right-sized” and one family may not need the level or extent of services that are ordinarily considered “standard” for a family office. Finally, it's important to find service providers that share your values and goals.
For families with extensive real estate holdings and business interests a family office can help manage complex financial structures and provide long-term planning. As you consider whether a family office is right for you, it's important to do your research and choose the right team based on expertise, cost, and shared values.