Do You Need a Family Office? How It Can Help You Manage Family’s Assets

Technically, a “family office” is a concept recommended for Ultra High Net Wealth (UHNW) families. One generation amasses so much wealth — often from a business they founded — that they want or need independent full-time experts to help them manage, invest, transfer and/or donate it. Used wisely, a family office also facilitates important financial discussions and education across generations. Because UHNW parents find it as difficult to discuss money with their kids as all others do, the experts help them frame and discuss the issues and their values, as well as facilitate transactions and record-keeping.

Whether or not your net worth puts you in the UHNW category though, if you have benefited financially during this pandemic — when the stock market, private equity and real estate outside of dense urban areas have risen dramatically even as our federal government took on debt that is the equivalent of our annual GDP — you can and will benefit from organizing your financial affairs as though you have a family office.

In other words, whatever your net worth, at this unique inflection point in history and with respect to the US economy, it can be prudent to consult with financial experts. Engaging in thoughtful discussions about money with your family now will enable you to make use of appropriate financial and legal tools and make the best choices for your family before this year ends.

In 2020, our tax laws allow each individual to transfer almost $12 million tax free to their heirs during their lifetime. That law could be changed through legislative action as early as next year. The “lifetime exemption” could be reduced or eliminated. Conventional economic thinking implies that this is likely to happen, too.

Similarly, there is extraordinary need for philanthropic support during this unprecedented time that continues to be punctuated by pandemic, social unrest, environmental disasters, and political uncertainty. If you’ve gotten wealthier as others have struggled, you probably feel inspired and compelled to pay forward your good fortune.

This confluence of law and facts makes it wise for families with substantial assets to consider acting before tax laws change in order to ensure that their assets are used to support the health, education and future of heirs.