When To Establish A Family Office?

I often get questions from investors about how and when to form a family office. This is particularly urgent when there is a generational cascade of wealth from parents to kids, and eventually grandchildren.

In fact the most frequent question I get is how much net worth is required to form a family office. When I think about this, the size of the assets determines the scope of solution. But the problems that persist are independent of the amount of wealth we are talking about.

I learned about all of this when I was 18 years old. My mother unfortunately died when I turned 18 and my father didn’t have the understanding or the inclination to manage the family portfolio. That task fell to me from the time I was 18 years old. My mother set things up as a testamentary trust with my father as the income beneficiary of her estate and with my sister and I as the capital beneficiaries of her estate. We had a lawyer and an accountant who fulfilled an important role in helping to guide a set of decisions that were right for our family. Fortunately my sister and I got along well and we didn’t have issues. But I’ve seen it in many families.

form irrespective of the parental guidance. Those differences get amplified when it comes to money and individual beliefs about money.

You see money is just fuel and whatever beliefs you have about money are simply accelerated based on the amount of money in play. If your belief is that money is something to be used to buy income producing assets, then you will buy more income producing assets. If your belief is that money is for buying luxuries, then you will buy more luxuries. If you believe that money is for philanthropy and solving social problems, then you will vector your investments in that direction.

It all starts with bringing clarity to the goals, not just for one individual, but for the family as a whole. I call this part of the family governance and that's the number one thing that a family office will do for you is bring your family together around how the family's money is to be managed.

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