Family estate planning offices provide an array of services specifically designed to meet the needs of affluent individuals and families. Family offices can provide high-net-worth families with a dedicated team of specialists to manage their financial and other interests more effectively than traditional wealth management firms.
Here are seven reasons why families in Los Altos, Palo Alto, and other Silicon Valley areas have chosen to create family offices, and why you may want to consider one as well.
A Family Office Has More Capacity to Tailor Services and Solutions
It is difficult for any single professional advisor to meet the complex needs of ultra-wealthy families. These families need advice and services that stretch beyond the capacity of one person, as their affairs often encompass various disciplines such as law, business, insurance, philanthropic planning, investing, trusts and estates, taxation, and more.
The family office can meet these needs because the family can employ professionals in these fields, who then act as part of a cohesive team working together in the family’s interests.
A Family Office Can Offer Wealth Education Based on the Family’s Values
Family offices can educate younger family members on how to use and not use their wealth, based on the family’s values. The younger generation gets the chance to learn about their family’s long-term vision, observe how the family deploys its wealth for business, personal, and charitable goals, and prepare to eventually take over management of the family’s affairs.
The educational opportunities afforded by the family office can also help maintain family unity and reduce disagreements.
Different Options for Family Offices
Family offices can be set up in at least two main ways: as a single-family office or a multi-family office.
Single-Family Offices
The single-family office is most often used by those with investable assets in excess of $100 million. Essentially, the single-family office is a company, created by the family, for the purpose of overseeing that one family’s wealth and affairs.
It exists to ensure that the family’s goals and priorities can be pursued independently, free from the conflicts and service limitations that come with utilizing outside firms.
Because it is a company owned by the family, the family is responsible for paying employee salaries, insurance costs, and all other expenses that come with running any business.
Multi-Family Office
The multi-family office is an investment and wealth management firm whose services are shared by a small number of clients, typically families with investable assets of more than $20 million.
The multi-family office provides families with the advantages of a single-family office, but without the overhead or the responsibility of running the company themselves. Because the number of clients is small, the multi-family office is still able to serve those clients in a more tailored way.
Lifestyle Management Services Offered by a Family Office
Family offices can provide services beyond the financial realm. Many offices handle various personal and lifestyle needs for family members, essentially acting as a concierge. Examples of family office services that are not explicitly related to money management include:
- Conducting background checks on staff
- Providing home security
- Providing security during domestic or international travel
- Management of aircraft and yachts
- Travel planning
Family Offices Offer Increased Privacy
By design, a family office consolidates the services a wealthy family receives. Instead of working with numerous outside firms, the family can work solely with the small group of trusted professionals it hand-picks for the job.
This reduces the number of firms and people who have access to the family’s sensitive, private information. This, in turn, limits the family’s exposure to potential external threats like fraud or extortion.
Legacy Planning as a Family Office Service
High-net-worth families can face numerous obstacles when it comes to maximizing their legacies and passing their success on to the next generation. Estate taxes are one example. Conflicts among family members are another.
Family offices can help with legacy planning by developing well-coordinated wealth transfer plans. Family offices work together with advisors in different fields to create comprehensive plans that are fully tailored to the family’s circumstances.
The team can evaluate various tools that could help accomplish the family’s wealth transfer goals. Just a few possible tools include dynasty trusts, grantor retained annuity trusts (GRATs), family limited partnerships, and many other options.
Transparency and Family Communication
When a family’s holdings reach a certain level of complexity, it becomes difficult for anyone to truly understand the depth and breadth of activities the family is involved in.
A family office can help alleviate this problem by serving as the central repository of information related to the family’s businesses, investments, property, and philanthropic efforts. Family offices can communicate with family members easily, keeping them informed. This leads to increased trust and transparency within the family.
Discuss High-Net Worth Estate Planning With a Bay Area Attorney
Regardless of whether your family is seeking to establish a family office, the Law Office of Janet L. Brewer advises high-net-worth Bay Area families on all aspects of estate planning, estate tax efficiency, charitable planning, and more. Led by an attorney with more than 30 years of experience, we provide practical advice to families who face complex legacy planning issues.
If you would like to discuss estate planning, gift tax planning, or trust administration, please call 650-325-8276 or send us a message anytime. We have an office in Los Altos for your convenience, and we offer virtual appointments as well.
