Family Office: The Reference Guide to an Intelligent, Smart, Successful and Wise Family Office

By Marc René Deschenaux and Christian Alain Frampton

Learn how to set up and manage your family office with legal and financial expert Marc René Deschenaux. In his financing practice, Deschenaux is highly reputed worldwide as an international financier, known for his state-of-the-art structures which resulted in 179 successful IPOs and 243 private offerings in private equity and private debt. He is also internationally considered the world expert in initial public offerings and as a reference in securities law, financing law, and trading law.

• Language: English
• Publisher: BookBaby
• Release date: Jun 27, 2022
• ISBN: 9781737567240

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Dedication

This book is dedicated to Ariana Kastanias

who has been my family

as an expression of my endless Love.

& to Audrey, Wyatt, Zayne & Tehya for their undivided support

Disclaimer

Copyright © Year 2022

All Rights Reserved.

No part of this Book can be transmitted or reproduced in any form including print, electronic, photocopying, scanning, mechanical or recording without prior written permission from the author

While the author has taken utmost efforts to ensure the accuracy of the written content, all readers are advised to follow information mentioned herein at their own risk. The author cannot be held responsible for any personal or commercial damage caused by misinterpretation of information. All readers are encouraged to seek professional advice when needed.

This book has been written for information purposes only. Every effort has been made to make this eBook as complete and accurate as possible. However, there may be mistakes in typography or content. Also, this book provides information only up to the publishing date. Therefore, this eBook should be used as a guide - not as the ultimate source.

The purpose of this Book is to educate. The author and the publisher do not warrant that the information contained in this book is fully complete and shall not be responsible for any errors or omissions. The author and publisher shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by this book.

ISBN: 978-1-73-756724-0

Table of Contents

BEFORE

Definition

Reasons to create a Family Office

The Conception of the Family Office

The International or Regional Family Office

Which Services should the Family Office provide?

The Critical Mass of Wealth

Investment Philosophy according to the History of the Family

Nature of Assets to Consider

Budget

INCORPORATION

When to Incorporate?

Where to Incorporate?

Simple Legal Structures

Corporation

Foundation

Trusts

Complex Legal Structures

Board

Phase I: Inception of the Family Office

ORGANS & PARTNERS

Management

Financial Analyst

Law Firms

Banking

Requirements

Banks

Accounting Requirements

Real Time Accounting

Accountant

Hiring

People Who Make Mistakes

Avoid

Jealous

Gossiping

Polemic

Judgmental

DURING

Avoiding Family Disputes

Dealing with Charity

Phase II: Development of the Family Office

PORTFOLIO

Liquidity Constraints

Frequency

Profitability Level Requirements

Dividend Stocks

RISK MANAGEMENT RULES

Conservative Approach

Management must be Risk Driven

REPORTING

Board Meeting Minutes

Management Meeting Minutes

Audited Financial Statements

FAMILY OFFICE CULTURE

Historical Log Book

EVOLUTION

Bibliography

BEFORE

Definition

A family office is a private wealth management advisory firm that provides customized services to  high-net-worth individuals and families1. Services may include investment planning, asset management, tax planning, and estate planning. Family offices are typically small businesses, with the average size being around ten employees. They are often run by a single professional or a partnership of professionals. Family offices differ from traditional investment firms in several ways. First, they provide more personalized service to their clients from asset management to concierge linked services. Second, family offices have greater flexibility in how they manage client portfolios. Third, family offices typically charge lower fees than traditional investment firms. This therefore often makes them a more affordable option for high-net-worth individuals and families.  Forth, Private Banks that use to service families quite well have turned way from tailor made services to apply strict uniform investment guidelines. However, by doing so they moved away from more personalized and riskier advisory and asset allocation practices and hence family offices are often created to take over from these shortfalls especially on non-conventional investments.

Think of the duties and responsibilities that come with being a member of an affluent family. There’s overseeing the family businesses, managing the family fortune, providing for future generations – and that’s just the beginning, you also need to consider long-term planning and succession planning. It can be difficult for many families to juggle it all without professional help. To manage an affluent family you need to take a lot of things to take into account.

Not only do you have to think about the day-to-day financial management, but you also need to consider long-term planning and succession planning. A family office can offer a total outsourced solution to all of an affluent family’s wealth management needs. They can provide everything from investment advice and accounting services to estate planning and philanthropy consulting. Thus, for anyone looking for a total solution to managing family wealth, a family office is worth considering.

The Many Disciplines of a Family Office

For affluent families, financial planning is not a one-size-fits-all proposition. That’s why professional help is essential. However, this also means that giving generalized advice to wealthy people is impossible. So, what if you could have your very own team of specialists to help service your every need? No, we’re not talking about a personal assistant – we’re talking about having your own family office. Family offices are becoming increasingly popular among the wealthy elite, and for a good reason. A family office can offer a wide range of specialized services, from estate planning and investment management to tax advice and private banking.

A family office provides high-level financial planning and offers an integrative approach to managing investments and protecting wealth. This type of office is beneficial for clients who want a coordinated strategy for all their finances. Families with multiple generations can also benefit from a family office, as it allows different members to share in the management of the family’s resources. Working with a qualified financial planner is essential for setting up a successful family office.

Legacy Planning and Management

As people amass more and more wealth, they face new and different obstacles. Unlike those who have always been wealthy, those who suddenly become rich must figure out how to handle their money responsibly.

This includes protecting their assets from taxes and ensuring that their heirs will inherit as much as possible. Wealth also comes with a responsibility to give back to the community. All these challenges make life after wealth accumulation a daunting task for high-net-worth families. That is why a comprehensive wealth transfer plan must consider all facets of affluent families. A thoughtful approach is essential for a successful transition from the estate planning and tax implications to philanthropic goals and family dynamics.

As it turns out, earning an income that puts your family in the affluent category can be both a blessing and a curse. The blessings may include traveling, dining out at high-end restaurants, and enjoying other luxury items. However, with this comes a responsibility to ensure financial security and integrity of distribution for generations to come.

One way to do this is by educating your family members on financial matters. This includes teaching them about budgeting, saving, and investing. You can create a legacy of financial stability that will benefit your entire family by doing so. A family office can help manage all these aspects of the plan.

When it comes to family offices, there’s often a team of professionals who work collaboratively with the family to manage their wealth. This includes attorneys, accountants, and investment advisors, all necessary to ensure that the family office operates effectively.

The advisory board is responsible for giving the family office guidance on their investments and other related financial matters2. Necessary disciplines such as legal, tax, accounting, and investment management are all represented on the advisory board to provide well-rounded advice to the family office.

This collaborative approach allows the family office to maintain focus on their long-term goals, while the families who establish strong communication protocols with their advisors can enjoy peace of mind knowing that their finances are in good hands.

Types of Family Offices

Single and Multi-Family Offices

A single-family office is a structure that provides professional management and administrative services exclusively to one individual and their closely related family members. By definition, a single-family office serves no other clients. This type of setup can be advantageous for wealthy families because it affords them a high level of privacy and personalized service. In addition, dedicated staff can help the family stay organized and make sound financial decisions.

On the other hand, multi-family offices serve a few families that benefit from economies of scale. A multi-family office is a private wealth management firm that provides customized services to a limited number of wealthy clients. This type of firm usually has a team of professionals who offer a wide range of services, including investment management, tax planning, estate planning, and family office administration.

By pooling their resources and working together, the families served by a multi-family office can enjoy the benefits of economies of scale. Pooling their resources allows these offices to provide a wide range of services that would be prohibitively expensive if each family were to go at it alone.

This includes reduced costs for services and access to exclusive investments that would be out of reach for any individual family.. In addition to investment and financial planning, multi-family offices can also offer estate planning, tax advice, and even concierge services. Families who set up their own multi-family office often find that they are better able to withstand difficult economic times and achieve their long-term financial goals and thus multi-family offices are becoming increasingly popular for affluent families.

Founder’s Office

Founders of an operating company are likely to have a lot on their plate. Their days are filled with juggling between the many needs of their business. They may not have time to think about anything else including how to invest in their future. That’s where family offices come in to action. These organizations support founders running their businesses by offering access to investment capital, advice, expertise and resources.

As the family office market matures, an increasing number of founder-owned family offices are addressing various questions related to their ownership structure and real estate holdings. Many family offices are considering or have already created a holding company to own their real estate assets. This move allows family offices to take advantage of institutional investors’ interest in the real estate market while maintaining operational control over their businesses. In addition, many family offices are exploring other ways to structure their ownership through joint ventures or limited partnerships. Family offices can ensure that they maintain control over their businesses and families for generations to come by taking such steps.

Shareholders Office

The Shareholder’s office aims to provide a space for shareholders to come together and support one another. Owning and operating a business can be difficult, but it can become easier with the support of those who understand the challenges. Each week, the shareholder’s office offers different opportunities for networking and collaborating. This allows families owning businesses to grow their operations while maintaining their relationships. Whether it’s sharing advice or having a shoulder to lean on, these interactions are valuable in strengthening the foundation of any company.

The Family Enterprise Office

Family business owners know that keeping things in the family can be both a blessing and a curse. On one hand, you have the trust and familiarity that comes with working with blood relatives. But on the other hand, there can be tensions and power struggles unique to familial businesses. Thus, setting up a family enterprise office is essential to staying together and keeping the business in the family.

In a family enterprise office, the focus is on wealth creation and preservation. This type of office typically includes members of several generations of a family who are all involved in the business. The goals of the office are to ensure that the business survives and thrives for many years while also providing financial security for the family. A family enterprise office must have strong communication and collaboration between its members to achieve these goals. They can make decisions that will benefit the entire family by working together and pooling their collective experiences.

A family enterprise office is also responsible for taking a long-term view of the risks associated with the family business. This means that Family Enterprise Offices must be proactive in their risk management strategies and be prepared to take appropriate action when risks materialize. In addition to risk management, FEOs also play a critical role in assisting families with succession planning, governance, and value creation.

By focusing on risk-taking strategies and risk management, FEOs can help families maintain continuity and stability while ensuring that the business grows and thrives. This can help ensure the longevity and success of the family business across multiple generations.

Multi-Generational Office

A multi-generational office can be a great way to support owners from multiple branches of the family. By having different generations working together, you can create a collaborative environment that encourages communication and idea-sharing. This can help keep the business running smoothly and preventing any conflicts between family members. A multi-generational office can also be a great way to pass down knowledge and experience from one generation to the next.

It’s no secret that the workforce is changing. With generations working side-by-side, it’s more important than ever to have an office that can support the broadest range of services. That’s why multi-generational offices are becoming more popular, and for a good reason. A multi-generational office can provide the best environment for young and old workers, making your team more productive and efficient.

Investment Office

The investment family office is a great resource for owners focused on investing as these offices can help them make the most of their investments by providing support and guidance. Whether starting or been investing for years, an investment family office can offer you valuable advice and assistance. Families looking to take their portfolio to the next level are increasingly relying on the services offered by an investment family office.

Family members often combine their money together to create a pooled fund when it comes to investment. By working together, families can reduce their overall investment risk while still achieving the desired returns on their overall investment. In addition, an investment family office can help keep communications open and improve coordination among family members to make important financial decisions. Inclusion helps breed responsibly and all members feel valued if their opinions are consulted.

Trustee Office

The trustee’s office is a vital part of any family trust. The office helps to ensure that the trust runs smoothly and efficiently while also providing support and guidance to trustees and beneficiaries. Thanks to the hard work of the trustee office, families can rely on their trusts to provide stability and security for years to come. In addition, the trustee office is always available to offer advice and assistance whenever needed. This makes the trustee office an invaluable asset. When it comes to estate planning, the role of the trustee is one of the most critical aspects. That’s why trustees must receive proper training and access accurate records. The Family Trustee Office provides these things, focusing on trustee training and record keeping.

Philanthropy Office

In our fast-paced and ever-changing society, it’s important to create a legacy that will continue to impact the world and people long after you’re gone. For many families, philanthropy is the perfect way to achieve this goal. A family philanthropy office can help support the goals of the philanthropist owner and make giving back easy and fun for the whole family.

Often, family foundations are the center of the Family Philanthropy Office. While this makes sense in terms of efficiency, it can also lead to problems. Because family foundations are controlled by the founding family members, they can be more likely to pursue their interests rather than those of the broader community. This can create tension within families and between family members and staff. Such issues need to be addressed for a family philanthropy office to be successful.

Reasons to create a Family Office

Education of Owners

As multi-generational family businesses continue to be the backbone of several economies globally, it has become increasingly important for wealthy families to access elite education and resources. Family offices provide an environment where owners and their families can come together and learn from one another while also benefiting from the guidance of experienced professionals. This unique structure allows affluent families to preserve their wealth and pass down their values across generations. In addition, family offices provide a sense of community that is oftentimes missing from traditional business structures. By working with a trusted family office advisor, owners of affluent families can ensure that they are making the most educated decisions possible for their businesses and loved ones.

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Financial Security for Owners

As most people think, a family office is where the ultra-rich store their money. While this is one function of a family office, it’s not its only one. In fact, for many affluent families, a family office is essential to maintaining financial security as well as a form of family unity. Creating a family office is the best way to ensure financial security for future generations of affluent families3. A family office provides the security and continuity of a personal financial advisor with the knowledge of working with affluent families. They understand that every family is different, with their own needs. A family office can provide a tailored approach to meeting those needs, whether assistance with estate planning, tax advice, or investment portfolio management. By using a family office, owners of affluent families can rest assured that their finances are in good hands.

Confidentiality of Information

For a wealthy individual or family, there is like to be a plethora of personal and financial details that they want to keep confidential. Fortunately, there are family offices that can do just that. The peace of mind that comes with knowing that all your affairs are handled in confidence is well worth it. A family office provides a confidential environment for affluent families to discuss their financial and personal matters. By using a family office, families can feel confident that their information will be kept private, which is important for those who want to separate their finances and personal lives.

Continuity of the Family

Many affluent families have a family office to provide continuity and support for the family business and its members4. Think about your richest and most successful friends. Odds are, they have a family office supporting them. Family offices provide continuity for affluent families by passing down financial expertise and preserving family values over generations. Family offices can be very advantageous for wealthy families because they offer all of the necessary services in one place. This allows the family to work with a team of professionals familiar with their personal and financial history and who can help them grow their wealth over time.

Customization of Financial Services

When it comes to their finances, many affluent families want a level of customization that is simply not possible otherwise or through the traditional financial services. That’s where family offices come in. Family offices can help  affluent families reach their goals and manage their wealth effectively by providing a more tailored approach.

Coordination of Advisors

The family office has become a popular solution for affluent families as an umbrella organization to manage their various financial and legal affairs. It can serve as a conductor of many external advisors, which can help reduce overlap and ensure that the best advice is being given to the family. A family office might not be necessary for all affluent families, it can be a valuable tool if used correctly.

Development of Wealth Strategy and Investment Strategy

When it comes to developing a wealth strategy, affluent families have unique needs beyond simply growing and preserving their assets. A family office can provide the comprehensive planning and support these clients need. First, a family office can provide access to investment opportunities that may not be available to the general public. These could include private equity or hedge funds, for example.

Second, a family office can help families stay organized and on top of their finances by providing consolidated reporting and tracking tools. This can help families make sure they are meeting their financial goals and avoid any potential problems down the road.

Purchasing Power to Access Products and Reduce Fees

One of the most important benefits of a family office is the purchasing power it provides to affluent families. A family office can pool the resources of its various members, allowing them to buy and sell assets much more efficiently than they could as individuals.

By managing investments and other aspects of their financial lives, a family office can help ensure that future generations will enjoy the same level of prosperity as their predecessors.

Alignment of Interests and Integration of Goals

Many affluent families have found that setting up a family office is the best way to ensure the alignment of interests and goals. Imagine a situation where you and your family are all striving for the same objectives, but each of you has a different approach on how to