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Family Offices

April 26, 2018

Family offices are a form of outsourced integrated personal financial management, guidance and oversight services.

Basically a family office is an organization that handles the personal finances of an individual and his or her family. It can be dedicated to serve a single family or an array of families, and can be organized and owned by the family or be an independent profit making business. The services fall under a generic title of family office but can be as varied as are the families it serves.

Generally, the services include planning, compliance, and administrative management of the principal’s assets and cash flow. Part of its focus is to manage wealth to maintain or grow it and to either actively manage the funds or monitor its management based on predetermined goals. It is not an operating entity but a support organization to provide an orderly mechanism of wealth and cash flow preservation and planned growth. Some family offices also actively manage the investments.

While many families have sufficient wealth to employ their own single family office (SFO), there are many benefits of outsourcing it to a multi-family office (MFO). MFOs can contain a wider array of in house experts in various disciplines along with the usual normal interaction of colleagues in a professional firm. Some family offices, or even many services, exist virtually with coordination of the specialists banded together by the team leader.

Many family offices perform all of the bookkeeping and accounting services required by the individual members it serves and this can include bill paying, income tracking and depositing, expense management, budgeting and auditing, dispensing regular payments to the family, obtaining and reviewing property, health, life and all other forms of insurance, making travel plans and booking vacation homes, bailing family members out of jail and even arranging for pets to go to the vet and elderly family members to set up and keep doctor appointments, healthcare advocacy, litigation support, setting up asset allocation tailored for individual family members, hiring and paying household employees including administrative assistants and chauffeurs, all necessary banking including (ugh) loan and debt and mortgage negotiations, overseeing philanthropic endeavors, tax planning and preparation, estate planning, investment planning and management and participation in private equity and venture capital investments, personal financial statement preparation and overall concierge services. The services cover almost everything a wealthy family would need, with the clients choosing the level of participation in each service. Not every family office provides every service and in those cases dedicated professionals are either brought in to be part of the team or engaged separately for that service.

There are many reasons why a family would engage a family office organization but the primary reason seems to be when the head of the family feels they have other more essential ways to spend their efforts and time and want to make sure that the financial affairs are maintained in an orderly efficient expeditious and secure manner. It also creates a mechanism where the family head can extricate themselves from dealing with younger, or older, family members and still be assured that these affairs will be handed and dealt with properly.

Family offices have become an essential service for the right people. At Withum we provide these services and anyone interested can contact me and I could explain it further or set up a meeting with the partners expert in these services. My email is emendlowitz@withum.com or tel 732.964.9329.

Ed Mendlowitz

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