The popularity of family offices among high-net-worth families has grown rapidly over the last decade. A Deloitte survey estimates growth of 67 percent in the past five years, with assets under management [projected to nearly double again by the end of the decade]. Once a sleepy corner of the market focused on routine administrative tasks, the family office model has expanded as families have recognized that preserving wealth over time requires professionalization. If you are in need of assistance with protecting your family’s wealth over time, contact our Texas high net worth estate planning lawyer today.
A family office is best understood as the creation of a company to run a family’s wealth enterprise. Beyond managing assets, it ensures that every function of the enterprise, from investment and distribution decisions to philanthropy and onboarding the next generation, is carried out in alignment with the family’s values and mission. In effect, the family office prevents siloing among professional service providers and serves as the central hub from which all decisions flow.
Growth in wealth is one driver behind the rise of family offices, but an equally important factor is a growing awareness of the need to steward family wealth responsibly. This is not simply about preserving capital; it is about using it wisely and ensuring that decisions made today do not jeopardize the long-term health of the enterprise.
Family office is a broad term, and how each family structures its office depends on its goals. At a basic level, a family office coordinates with attorneys, tax professionals, and investment managers to handle the ongoing maintenance of wealth and assets. From there, it can scale to meet a wide range of needs. [The Wall Street Journal has reported](https://www.wsj.com/finance/investing/what-are-family-office-firms-d21d8408?) that some family offices employ full-time domestic staff, art advisors, and even crews for aircraft and yachts.
The expansion of family offices reflects a hard reality: managing significant wealth spread across investments and operating businesses is inherently complex. Wealth is built through intentionality, and as the enterprise grows, so too does the risk of leakage and losses caused by inefficiency. By establishing a family office and staffing it with trusted advisors and professional managers, families introduce a disciplined layer of oversight that helps ensure their wealth and business activities remain aligned with their mission.
That level of specialization and coordination comes at a cost. Running even a modest family office can easily require millions of dollars per year, making it a practical solution primarily for families in the decamillionaire range and above. For families seeking some of the benefits of a family office without the full expense, multifamily offices can be a viable alternative. In this model, multiple families share core costs while gaining access to many of the same services and experiences.
Like private trust companies, family offices are highly specialized solutions designed for families with specific needs. Families that do not require a fully staffed family office, however, are not without options. In South Dakota trusts, for example, statute provides for a Family Advisor role. This role mirrors some of the core functions of a family office by appointing a single person or firm to coordinate across advisors and service providers. In addition to facilitating sound, coordinated decision-making, firms offering Family Advisor services often provide education and reporting to support the ongoing financial literacy of family members. For families committed to managing their wealth thoughtfully, but whose enterprise is not yet large or complex enough to justify a full family office, this can be an effective alternative.
Wealth measured in the millions of dollars is inherently complex to manage, particularly across generations. Using the tools available in law and in the marketplace to govern that wealth, and to ensure alignment with family values, helps ensure that the effort required to build it ultimately serves a greater purpose, benefiting both the family and the communities in which they live.
Contact Stuart Green Law, PLLC today to schedule a consultation.