conflicts may also end up wasting family assets and harming the family enterprise . However , family office founders may be able to avoid or blunt these clashes if they put legal structures in place to compensate for their inheritors ’ present lack of knowledge or abilities .
Expanding Operations
Among the single-family offices we surveyed , 36 % have a strong interest in expanding their operations to work with non-family members . This interest is significantly higher among inheritors ( 55 % of whom said they were interested ) than founders ( 25 % of whom cited an interest ).
Different generations of ultra-wealthy families often have different reasons for opening their offices to other families ( in other words , turning their single-family offices into multifamily offices ). Founders are likely more motivated by the idea eration ’ s own unique set of criteria . This disconnect exposes some critical fractures that , if left unattended , worsen and detract from family harmony , profitability and success . To not only survive but prosper and thrive across generations , these family offices will need support from investment , tax and legal professionals to make sure several things are accomplished :
• They must ensure that their financial succession plans are up to date and reflect family composition and objectives .
• They must evaluate and adopt operational succession plans .
• They must identify skills that are weak or lacking in the inheriting generation and build professional development objectives into operational plans to ensure that operations are stable and continuous .
• They must identify possible reasons for multigenerational succession and
When heirs aren ’ t prepared to assume control , 89 % of private client attorneys said they expect a moderate to high likelihood of family conflict that can further impede succession plans .
A smaller percentage of attorneys , 34 %, cite the use of such plans as a way to foster family unity before and after the founder or controlling generation steps down . While forcing family members to collaborate can be detrimental in certain circumstances , there are some productive and proven methods that can help promote family cohesion .
Preparation And Conflicts
Despite the immense responsibility ahead of them , only 13 % of inheritors feel well-prepared to assume control of their family office . When heirs aren ’ t prepared to assume control , 89 % of private client attorneys said they expect a moderate to high likelihood of family conflict that can further impede succession plans . Aside from causing bad feelings that damage relationships , these of using their knowledge and infrastructure to support people they know , understand and trust . Inheritors , meanwhile , are thinking more along the lines of building the family office into a business . Specifically , 89 % of founders said they wanted to bring other families like their own into the venture , while only 10 % of inheritors said the same . At the same time , 82 % of inheritors cite the ability to use their in-house expertise and capabilities in ways that can help them generate profits and amass larger pools of assets that can result in lower fees and better access to managers , which is of interest to just 22 % of founders .
Closing The Gap
It ’ s clear there ’ s a generation gap in single-family offices , and that future opportunities are gauged against each gen- estate planning , and ensure plans are drafted to meet those goals .
• They must evaluate the need for personal and family tax planning and wealth protection .
• And finally , they must incorporate family meetings , governance , mission development and philanthropy into planning when there ’ s an interest in passing on more than business assets or wealth .
HANNAH SHAW GROVE is the chief marketing officer at Foundation Source , the nation ’ s largest provider of specialized support services for private foundations .
RUSS ALAN PRINCE is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius . Together , they are the co-authors of Inside the Family Office : Managing the Fortunes of the Exceptionally Wealthy ( 2004 ) and The Family Office : Advising the Financial Elite ( 2010 ).
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