- What is a Family Office?
- How to Discuss the Family Office with the Family Members
- What Problems Can the Family Office Solve?
- Protecting Assets in Crisis
- Legal Protection and Tax Planning
- Complex Management
- Expansion of the Investment Portfolio
- Going Beyond your Jurisdiction
- Family Office and its Creation: Summary
Many people know about the opportunity of organizing a Family Office structure and understand how important it is, but not all wealthy families actually take this practical step. The biggest obstacle in most cases is a conflict within the family: not all relatives agree to adopt this scheme of family protection or fully understand the significance and necessity of this strategic move.
Let’s look at how to start a conversation with family members and show them that a Family Office is one of the safest and most reliable options used to strengthen and protect transgenerational wealth. Competent business planning done by all family members is the best way to solve problems.
The best scheme for family capital management is a Family Office formed on the basis of an offshore company, trust, or Fund.
on offshore structures and jurisdictions
that would best meet your
asset protection goals.
on offshore structures and jurisdictions that would best meet your asset protection goals.
What is a Family Office?
A Family Office is an administrative and financial ecosystem within one family that allows you to configure several companies simultaneously within the same Fund, trust, or offshore corporation. At the same time, the principal management is always carried out by the family, and the decision on the distribution of profits and inheritance to the second, third and subsequent generations is made by all members.
Look at the most promising areas for family office formation to protect transgenerational wealth:
The experts of our portal will tell you how to open and configure the Family Office quickly and legally at an affordable fee. Ask them for advice and get a range of services as soon as possible!
How to Discuss the Family Office with the Family Members
Sometimes it is not easy to convince your family that it is better to unite. It is often the case in families where there are members who rely too much on themselves, are born perfectionists, or do not take business and finance seriously. However, protection of your family wealth depends on the way you communicate the whole idea to the family, so you need to start your dialogue wisely.
We suggest using the Quick Start Guide to know how to find a way with your family. Gather at the table to negotiate, choose the most appropriate strategy, express your ideas and proposals, discuss all issues, and finally come to a mutual decision:
- Set the agenda and inform your relatives about the topic of the debate in advance. They should be prepared to discuss these matters.
- Create a cozy atmosphere for the dialogue about family values and their protection. Be productive in the conversation and respectful of all participants.
- Establish basic communication rules to avoid general noise when many people are speaking at once. Support participants and help them with complex issues.
- Make a smooth transition between the topics. Don’t provide all the information at once as it takes time and mental effort to absorb it. Make sure the dialogue proceeds consistently and everyone has an opportunity to express their opinion.
- It is better to start your conversation with a discussion of the family business and then move on to more significant issues of Family Office planning, protecting transgenerational wealth, and ways to solve these problems that you want to share with your family.
- Be sure to mention the advantages of the Family Office and give real examples from the lives of other wealthy families. It is better to do this in the process of discussing the topic of Family Office in a mild convincing manner.
- Write down all of your family’s proposals and all the contributions made by the participants on how to preserve and protect family capital. Be sure to set deadlines and fulfill these promises as this will help people follow the topics of the conversation and could stimulate their responsibility.
Look at the questions that will help your family understand how important it is to create a Family Office and unite to make a decision to protect transgenerational wealth:
- How will the economic situation in the world and the profitability of your business change in 2023-2024? How will this affect your business and level of asset protection?
- What are the main changes we can expect in terms of investment, exchange rate, and economic risks during a period of geopolitical instability when the crisis has affected all segments of the population?
- What opportunities and threats do these changes pose for our family and budget?
- How can our family prevent possible risks and respond to current changes?
- How can we safely increase financial protection of family wealth for our generation and future heirs?
- How can we engage all family members to raise income and protect assets from external influences and economic risks?
You can supplement the questions with other aspects that relate personally to each participant of the conversation and the current state of family business.
What Problems Can the Family Office Solve?
The most basic and important issues that can be solved using a Family Office include:
- financial planning
- inheritance aspects
- asset protection and family status
- tax reduction
- increasing profitability through collective business organization.
When you talk to your family about it, it would be better to tell them about the pros and cons of the Family Office and include this topic in the list of questions.
Protecting Assets in Crisis
If all family members (brother, son, daughter-in-law, son-in-law, father, etc.) have their own businesses, preservation of all of them and passing them on to the heirs could be a good family goal that can unite its members. Given rising inflation and the volatile global economic situation, many companies collapse as they cannot find a way out of the current crisis.
If you form a Family Office, you will have a cohesive structure where each business entity has a connection with other family areas. You can change the field of activity at any time if you need to, and other relatives will support you.
Legal Protection and Tax Planning
Legal protection and tax planning are carried out within a single parent company, Fund, or trust through which the family capital is managed. A competent selection of personnel, lawyers, and tax officers will help to realize the whole project smoothly and without conflicts.
When legal disputes and tax matters are settled by each family member within their company, it may create a lot of problems and even lead to non-compliance with legislation or improper planning. As a result, your business may incur financial losses.
If you want to protect transgenerational wealth, you will not only have to open the Family Office but also configure it for asset management. This will spare you unnecessary waste, especially if there are big spenders in the family. All profits will be distributed among family members according to the established rules.
This issue is discussed before the registration of a trust, fund, or offshore company. You will need to determine a responsible person to represent the interests of your Office, which can be someone from the older generation of the family or the Family Council. The whole process is similar to the registration of the offshore business but is done within one family. This is particularly important because the capital remains inside the family, and business planning does not involve other shareholders, co-founders, or partners.
Expansion of the Investment Portfolio
In 2022, many family offices opted for direct investments without government involvement, which is more beneficial in terms of financial returns and security. Investments in cryptocurrency, real estate and technology are also enjoying the peak of popularity at the moment.
In this situation, the Family Office allows you to successfully configure investments with the participation of professional lawyers, analysts and consultants. If you have profits, they should not be kept in the accounts uselessly: they must work for the investor and at least cover all current expenses, or bring more money under optimal conditions. If this aspect is excluded from planning, passive storage of assets in a bank account may be unprofitable.
On the whole, it is much more comfortable and safer to solve such complex issues as the choice of investments and market analysis within one family by engaging lawyers and consultants.
Going Beyond your Jurisdiction
This applies more to families who have business only within one state. Family configurations may be quite different at present as clan members can live in different countries and conduct their activities in the place of permanent residence.
When you organize a Family Office, the geography of partners and customers moves to a global level, which can boost your career and attract much more funds to the general family budget.
You can also add tax planning here as a way to reduce the financial burden. For example, offshore companies in Nevis, Belize, and Panama have no tax requirements on profits generated outside the country of incorporation.
An offshore Family Office also provides the opportunity to open additional bank accounts in protected jurisdictions, make the information on beneficiaries more confidential, and make inheritance arrangements with minimal tax requirements.
Family Office and its Creation: Summary
If your conversation was successful and you decided to combine all the businesses into a single system called the Family Office, congratulations – you are on the right track! All you have to do now is to find employees, experienced lawyers and accountants for your family capital management company and decide on the form of activity (company, trust, fund), which depends on many aspects.
We offer advice on all issues related to family assets and their protection offshore, as well as professional services for the formation of such structures. Contact us today at email@example.com and we will get back to you very quickly.