A Guide to Using a Family Wealth Office

In today’s world of economic uncertainty, managing your finances can seem like a daunting task. Shifts in the market and inflation are making it harder for millions of people to make ends meet. Hell, even buy eggs has become financially complicated this year.

To be in charge of a business in this day and age, you need a team of people to be successful. Over the course of every businessroundups.org’s life, they hire the following: an accountant, a lawyer, insurance agents (both personal and corporate), a banker, an investment advisor, etc. The list goes on. Moreover, finding the right people you can trust is an art in itself.

As a result, many business owners may feel stuck in the middle, facilitating communication between parties. A family office is an interesting solution to this problem and is no longer reserved for the top 1%. You can read about the different areas that can affect family wealth in different ways financial publications.

Recently I spoke with Jim Dew, CEO of Dew Asset Management, about the benefits of a virtual family office for entrepreneurs. I was extremely impressed with how having the right team and structure can deliver great financial results. And it makes sense; The rich get richer because they use specific strategies to grow and protect their wealth. Here’s what entrepreneurs should know about using a family office for wealth management:

What is a Family Office?

Billionaire have had a secret advantage for centuries when it comes to building and preserving wealth. It’s called the family office. Before deciding whether a family office is right for you, it is necessary to fully understand what it is. This structure is what pretty much everyone in the “billionaires’ club” creates when they get seriously rich.

To build a family office, a billionaire will hire all the necessary professionals as full-time employees. Specifically, these new employees will work for that one billionaire and his or her family. Think along the lines of tax, legal, insurance and investment experts, along with attorneys and accountants. It goes without saying that a traditional family office is expensive to build and run.

However, it is worth it if you manage a financial empire. Therefore Bill Gates, Oprah Winfrey, Jeff Bezos and Sarah Blakely all have a family office. For everyday entrepreneurs, this structure is still beneficial from a financial point of view, but probably unreasonable. Despite the cost, it is probably possible to achieve a custom virtual structure.

Connections every family needs

To better understand how a family office works, we will discuss a number of important issues. This includes every position that is commonly assumed, how they communicate and how they benefit each other. It’s worth noting that positions and components can be customized to suit your business and lifestyle needs. For example, you may not need a full-time CFO, but instead can have a coordinated financial analysis effort by using an outsourced part-time CFO in conjunction with an accountant and bookkeeper. You can also find a real estate attorney who specializes in asset protection structures.

accountants

As a business owner, you probably already have contact with at least one trusted accountant. If not, it is wise to consider this. This trusted accountant is a tax expert who keeps track of your administration bookkeeping–or work with your accountant– to make sure you stay in the dark. For example, they can audit your books, prepare payroll tax reports, or simplify all the financial hassles and details that come with running a business. When setting up a family wealth office, it is important to have an accountant who can communicate your financial situation and work in your best interest to achieve financial goals.

Investment Advisors

Investing is a valuable way to grow your wealth. So it’s a good idea to use investment advisors who can work with you and your accountants and make sure you get a positive return. A family office may be responsible for managing investment portfolios, private equity deals, hedge fund investments and/or venture capital investments. If you are interested in commercial real estate, they can also handle property purchases, sales and property management. Like everyone on your team, these professionals are available to help grow and protect your wealth.

Tax planners

Many accountants are tax historians rather than tax planners. For example, a tax historian may fill out all the right forms at the right time, but look in the rearview mirror. What you need in your family office is a tax planner. A tax planner proactively looks ahead and provides you with ideas on how you can legally save as much tax as possible.

This tax professional may be your accountant — or an expert who works with your accountant — who can come up with strategies to help you pay as little tax as possible. In any case, they can help you when it comes to tax matters. For example, they can even find tax savings you can receive by amending previous returns. It’s like finding that $20 bill in your pocket that you didn’t know you had! Above all professional tax advisors must prioritize knowing the ropes and keeping abreast of changing state and federal tax laws.

Insurance experts

Everyone needs insurance to protect their property. But as your wealth grows, this becomes even more important. Insurance transfers risk, which is why it is key to a defensive financial strategy. Plus, there are tricks of the trade that insurance experts know that can benefit you and your family in the long run.

Insurance is your first line of defense when it comes to asset protection. Making sure you have the right coverage and that trusts or entities are listed as additional insured are some of the details that business owners often overlook. In addition, business owners need business insurance policies such as EPLI (Employee Practice Liability Insurance) and Cyber ​​Security (for things like ransom attacks). Having good experts for personal and business coverage is absolutely essential in a family office structure.

Lawyers

Another aspect of protecting your assets is avoiding lawsuits that could take it away. Having a lawyer by your side means you have someone who can advise and represent you or your family. Whether in court, before government agencies or in private law matters, they can act on your or your family’s behalf. They can interpret laws, rulings and regulations for individuals and businesses, which becomes more important as your wealth grows.

It is also critical to have a trusted attorney who can help with estate planning. Every businessroundups.org needs one estate planbecause death is inevitable. If you don’t already have an estate plan, it is highly recommended that you prioritize it. While many people understand that an estate plan allows you to name the people or organizations you want to give your assets after your death, it is much more than that.

You also need to consider things like instructions for your care and financial matters if you become incapacitated. Essentially, this means appointing a power of attorney and funding assets into a living trust. You want to update the beneficiary designations and appoint a guardian for the care and inheritance of your minor children. While it is important to consider your family and your own well-being when planning wealth, your business is an important asset that deserves attention.

Considerations you should make for your business include deciding whether to transfer or sell. Either way, both options include paperwork. Your company’s bylaws and operating agreement can work with your estate documents to make this process easier.

It is important to note that wealth planning is an ongoing strategy, not a one-time event. You should review and update your plan as your family, financial circumstances, and laws change throughout your life. That’s just one of the many reasons why having an attorney on your team will help you, your loved ones and your business.

The benefits of a Family Office

If you’re the type of person who believes you can do anything — let’s face it, most entrepreneurs are — it can be difficult to relinquish control and let someone else take the reins. It can even be difficult to get advice from other people. But in the long run, it will benefit you in so many ways. You can save time, which you can then re-prioritize to work on your business or spend time with your family.

A family wealth office allows you to spend time on the things that matter most to you. It is a centralized resource that you do not need to manage. Since you don’t have to juggle everything, nothing will slip by. Experts, because of their passions and knowledge of the industry, are able to see the things you don’t see.

How to create your own virtual family office

One of the hardest issues with having multiple advisors and consultants is navigating collective team management. Usually they do not communicate or cooperate with each other on a regular basis to achieve the best result for the businessroundups.org.

This means that you are responsible for the entire infrastructure, which takes valuable time away from your other responsibilities. To make matters worse, you probably don’t speak the languages ​​of tax, law, insurance or investment. With a virtual family office, that responsibility is shifted to an estate planning agency.

The first step in setting up a family office is to evaluate your current team of advisors. You may need to arrange this yourself until you are in a stable and successful financial condition to transfer this to the appropriate estate planning company. Typically, your current advisors are not all “A” players. You want to keep your top performers and replace the advisors who aren’t getting the results you want. The right estate planning firm has the required expertise to oversee and communicate with your advisors and begin managing the moving pieces.

It comes down to

As Jim Dew said, “Billionaires want a team that works only in their best interests and you should too.” When it comes to a family office, you want a team of people who can protect, manage and grow your wealth. In the long run, family offices can save you time and help you live the life you want. By combining wealth, cash, risk and lifestyle management with financial planning, family offices help clients navigate the complex world of wealth management. As an businessroundups.org, engaging a family wealth office is a smart strategy to prepare for the future and your estate.

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