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What Is A Family Office?

4 min read

What Is A Family Office?

While socialists claim that the State is the best agent to distribute wealth, libertarians know that money is better managed by private hands (individuals, businesses and even families). The family is a fundamental building block of society, and that might be why globalists are trying to destroy it and make the State the head of the household.

Imagine you worked a lot during your life to secure your descendant’s financial future, but since you did not protect your wealth, once you pass away, the State seizes it, and your children are left with nothing but bread crumbs if at all. Not only have you lost plenty of money throughout your life due to astronomical taxes and not using the right tools, but now that you are not in this world anymore, your kids can’t taste the fruit of your labour and probably need to start from scratch.

I know this sounds unfair, but there is a wide range of solutions. In previous articles, I covered digital nomad visas, trusts, foundations and other tools to secure your new life abroad and protect your wealth. According to your case, you will need a specific tool. If you plan to serve your family's needs, a family office structure will help you out.

 

If you plan to serve your familys needs, a family office structure will help you out

If you plan to serve your family's needs, a family office structure will help you out

FIRST CONSIDERATIONS

Great fortunes are often a byproduct of a well-executed business project and smart investment strategy. In other less common cases, they are the result of luck. Either way, both scenarios derive a net worth that increases generation after generation, so it must be preserved and protected.

When a family’s net worth is more modest, there are not many difficulties in terms of management. A single-family member can deal with this task as long as they have the time and knowledge, or the family can hire a financial advisor who plans investments according to the family’s goals. However, issues such as familiar cohesion and legal and tax advice arise when the net worth gets to a certain size. Here is where the family office structure comes into play.

 

Related content: The Benefits Of Living In A Commonwealth

 

Cayman Islands offers one of the lowest tax jurisdictions in the world

Cayman Islands offers one of the lowest tax jurisdictions in the world

WHAT IS A FAMILY OFFICE?

A family office is a private enterprise dedicated to preserving the wealth in a family from generation to generation. As a result, the net worth is managed by investing in financial and non-financial assets. A family office deals with everything related to the familiar patrimony, including investments, estate planning, taxes, investment funds, pension plans, real estate, etc. It counts many specialists, such as tax, law and financial experts.

When it comes to this structure, you have two main options: either you create a single-family office (SFO) or a multi-family office (MFO). As the names suggest, the former is for just one family, whereas the latter is for several families. An SFO gets more customized and exclusive treatment since the experts must attend to one affluent family at a time. However, an MFO, although it is more affordable, does not offer much exclusivity since the experts have to attend to the needs of multiple families. MFOs are more common because they allow for cost-sharing among several families.

 

Related content: The Mindset Of A Millionaire

 

Saint Kitts and Nevis are perfect for tax mitigation strategies to protect and preserve the family money for the next generations

Saint Kitts and Nevis is perfect for tax mitigation strategies to protect and preserve the family money for the next generations

HOW DOES A FAMILY OFFICE WORK?

A family office assists you on how to manage your net worth in a customized fashion. With the creation of this structure, you will enjoy more control over your wealth so that you can manage it completely and guarantee its preservation throughout time. For that reason, a family office offers the following services:

  • Wealth management: this allows for the revision of the family structure and the establishment of a family protocol, which is organized and adjusted over time to plan for the next generations.

  • Wealth growth: this is meant to determine what the global investment strategy will be, including investment ideas.

  • Familiar relations: this is one of the main distinctive keys of a family office. Put simply, all family members are taken care of and are offered legal and tax advice.

  • Other non-financial issues: this can also help you with private schooling and travel arrangements.

These are only general services, though. Depending on the case, a client might need a world-class team of experts to protect and multiply their wealth, while another just might need to organize day-to-day aspects and family relationships.

 

If you plan on increasing your individual wealth, Puerto Rico has opportunities for you  thanks to the Investor Resident Individual Tax Incentive

If you plan on increasing your individual wealth, Puerto Rico has opportunities for you  thanks to the Investor Resident Individual Tax Incentive

WHEN IS IT CONVENIENT TO CREATE A FAMILY OFFICE?

Creating a family office becomes necessary when the net worth becomes unmanageable for a single family. In other cases, this structure comes into play when a business has been sold, and the family must organize the financial and real estate portfolio and make it last over time. Also, if a family or individual makes plenty of money quickly, it is recommended to use this. This applies to people who inherit money, hit the lottery and even athletes and artists who amass lots of money quickly but don’t know how to manage it.

Regardless of the case, it is important to remember that a family office structure is recommended when there is a familiar fortune, and the main goal is to protect and preserve it for the next generations.

 

Related content: The Basics Of How To Get A Second Passport Or A Second Residency

 

A family office deals with everything related to the familiar patrimony

A family office deals with everything related to the familiar patrimony

LEVELS OF SOPHISTICATION

The bottom line of this structure is that a firm invests money on behalf of a set of families. However, a family office tends to be so unique that it is difficult to define what it is. Namely, each family office has particular goals and features that must be studied carefully. A family office has a specific:

  • Source: SFO or MFO, meaning the office obeys the commands of one or multiple families.

  • Structure: over-the-top professionals such as lawyers and investment advisors to just one appointed individual advisor who takes care of almost everything.

  • Strategy: wealth preservation is often the main objective, but it may be as important as multiplying capital.

  • Size: the amount of capital varies from case to case. It may be some millions or multiple billions.

 

Family office will help you to focus more on taking care of your family

Family office will help you to focus more on taking care of your family

FINAL THOUGHTS

Family offices are not that common as opposed to trusts and foundations. According to Credit Suisse, there exist around 10,500 family offices globally. Any family with a net worth of more than $100 million USD should consider a family office. However, this does not only help you deal with financial or legal matters. Depending on your needs, you can enjoy services such as educational programs and day-to-day aspects.

If you want to secure your new life abroad and your family’s future, a family office will make the job easier. Depending on the capital you have raised over time, you might need to create this structure to effectively manage your wealth since it might be too large to deal with on your own. Once the task gets too complex, it is time to delegate responsibilities, including taxes, legality and investments. That way, you can focus more on taking care of your family, dedicating time and offering them the upbringing and education you dream of.

 


WORK WITH ME

I help my clients to move offshore for freedom, privacy and autonomy by focusing on the immigration, legal, and tax issues that you will face when becoming an expat. If you would like to work one-on-one with me on getting out of your home country (or setting up a Plan-B location), then read this important letter and fill in an application form to become a Private Client. My fees are not cheap; however, I can assure you that when you work with a professional firm like ours, the results will be worth it.

 

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Mikkel Thorup

Written by Mikkel Thorup

Mikkel Thorup is the world’s most sought-after expat consultant. He focuses on helping high-net-worth private clients to legally mitigate tax liabilities, obtain a second residency and citizenship, and assemble a portfolio of foreign investments including international real estate, timber plantations, agricultural land and other hard-money tangible assets. Mikkel is the Founder and CEO at Expat Money®, a private consulting firm started in 2017. He hosts the popular weekly podcast, the Expat Money Show, and wrote the definitive #1-Best Selling book Expat Secrets - How To Pay Zero Taxes, Live Overseas And Make Giant Piles Of Money, and his second book: Expats Guide On Moving To Mexico.

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