For those in the know, a “family office” is something that many wealthy families rely on to provide financial support and advice. A family office can do a little bit of everything: providing investment management services, tax and estate planning, philanthropy support, even security and health care matters. While a family office is a great way to manage money and ensure proper estate planning, it’s something out of reach to all but the wealthiest of the wealthy. Fortunately, lessons can be derived from those who have worked in the field that can be applied to the lives of those making do with less.
Plan for the long haul
Experts agree that one of the best habits practiced by family offices is one of long-term planning. The goal in the mind of every such office is to sustain a family for generations to come, not just to serve as an expense account for those alive today. Investment plans, trust decisions, asset purchases and inheritance schemes are all thoroughly thought out with a long-term view in mind. The same advice applies to your family. Before finalizing a trust or will, think through the long-term implications of your actions and how your money (and the strings attached to it) can impact your family in the future.
Use different vehicles to hold investments
The very first thing a family office considers, even before deciding what to invest in, is how to hold the asset. There are a multitude of options to consider: buying and holding an asset in your own name, using a revocable living trust, perhaps even creating a partnership.
One popular option is a revocable living trust. This entity is used to shield individuals from probate by permitting assets to be passed directly to their heirs. Revocable living trusts serve another purpose as well; by avoiding the probate system, information that would normally have to be publicly disclosed can be kept private. Many people are concerned with ensuring privacy for their family and such a vehicle achieves that goal.
Dynasty trusts are another tool used by some families to maintain property or other assets in perpetuity. Family limited partnerships (FLPs) are complicated to set up but can be a great way to hold certain business assets without incurring massive tax bills.
Fortunately, you don’t have to have a family office to take advantage of these tools. Sitting down for a meeting with an experienced estate-planning attorney is a crucial first step in ensuring your family is taken care of in the best way possible. Whether you have few assets or a multi-million dollar estate, you need to have an effective estate plan that works for your family. As a board certified estate planning, trusts, and probate lawyer, I have the skills and knowledge to handle complex estate planning matters (certified as a specialist by the California State Bar Board of Legal Specialization). To schedule a consultation to discuss your estate planning goals and needs, please contact us.
Money Lessons From The World's Wealthiest Families by Carol Pepper, published at Forbes.com