November 1, 2022
Family wealth that transcends generations is not the result of luck (with a few exceptions), rather the result of a lot of effort, a long-term strategic plan and excellent management and organization. Without these components, it is difficult for a family’s wealth to be preserved over time.
When we talk about less valuable assets, managing them is not usually a problem. Sometimes it can be done by the owner of the assets and sometimes it can be done with the assistance of a financial advisor who plans investments and adapts them to their objectives and goals.
However, when it comes to organizing a very large family fortune, other issues come into play, such as family cohesion, domestic wealth management, legal or tax advice, among many other issues. It is at these moments when the need to create a “family office” can and should arise.
What is a family office?
The so-called family offices are constituted as a private company that is created with the objective of managing and preserving wealth in a family. Family offices are in charge of managing everything related to family wealth, such as investments, inheritance planning and family governance issues, tax issues, insurance, pension plans, real estate, boats and airplanes management, etc. They are usually made up of managers, trustees, financial advisors, accountants, tax specialists and legal experts, etc.
There are two options when considering a family office for wealth management:
When is it appropriate to create a family office?
The creation of a family office is necessary when there is a certain amount of business wealth that, due to its volume, is difficult to manage. It can also happen that a family cannot agree when it comes to managing the wealth and needs to delegate this management. Sometimes families or individuals inherit or gain wealth in very short periods of time and are not able to manage such fortunes, for example, sportsmen or lottery winners.
The main reason for a family to create a family office is to preserve their fortune and to ensure that it will last for future generations managed as a single unit.
How does a family office work?
Family offices manage global family wealth in a personalized way. With the constitution or hiring of a family office, the aim is to have greater control over the wealth in order to manage it in a comprehensive manner, guaranteeing its preservation over time.
To this end, the services on which these types of companies are based are:
Who can help me create a family office?
If the main objective of the family wealth is to guarantee its preservation and growth so that it can be passed on to future generations and we are considering the creation of a family office, we will first have to analyze the volume of the fortune, since it will be necessary to evaluate if we need to create a single-family office or if it will be enough to turn to a company specialized in multi-family advice that can be in charge of all the management.
If your wealth is large enough to create a single-family or multi-family office, you can turn to specialized advisory firms that will help you create the foundations and structure to manage the family fortune in an optimal and effective way.
By Florencia Ribes.