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Have you considered family office services?

06/21/2017  |  By: Jacqueline Weiss, Manager, Tax

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You don’t have to be a Rockefeller to enjoy the benefits of a family office. While traditionally, only families with a net worth of $100 million or more would establish a family office to control and maintain the family fortune, the practice has expanded to encompass a broader clientele.

Firms today offer multi-family office services that assist families with services ranging from only bill pay to a full concierge-type service. You pay for as little or as much attention as your family needs.

Firms serve multiple families, so the cost of maintaining a staff is spread among multiple families, making services accessible to a larger base. Whether you’re dealing with multi-generational wealth or are in the process of generating wealth, these services can be beneficial to you.

Bill pay

At the entry level, a family office can help with bill pay. All of your monthly bills can be directed to the firm where mail is processed and bills are paid with little involvement from you. You’re always aware of what’s being paid, but you aren’t dealing with the paper, filing or organization of the information on a day-to-day basis.

The firm maintains copies of bills, reconciles bank accounts and delivers reports to you. This service is popular with entrepreneurs and executives whose valuable time is more productively spent increasing wealth than with routine financial maintenance.

Bill pay is also helpful for individuals who own multiple homes or investment properties and would like to have expenses segregated for management and planning. We’re in a time where many early retirees are taking care of their parents. A bill pay service might be invaluable for freeing up time and providing peace of mind.

Personal financial statements

A step up from bill pay is a package including personal financial statements. The firm creates a balance sheet from assets you own and updates it regularly. Investment activity is booked. Detail of credit card activity and tax-related expenses are tracked. An income statement is generated monthly to help you monitor the performance of your investments and track your spending — potentially maximizing your tax savings throughout the year. Since CPA firms are some of the leading providers of family office services, your family office is already working closely with your tax preparers. They will already have access to your current financial reports, simplifying your year-end tax preparation.

Value-added services

Several value-added services are also available. A family office team can make sure your household employees are paid and that payroll tax returns are filed on time. They can put a budget in place so you can anticipate upcoming expenses and make sure cash is available when needed. They can also coordinate direct transfers from your investment accounts as cash is needed.

One popular service is the annual review of insurance policies, including home, auto and valuable articles, as well as umbrella policies and other special coverage. The family office can verify that policies are up to date, that coverage is adequate and that you’re not open to liability. They can also maintain a schedule and watch for renewals so that no payments slip through the cracks and coverage doesn’t lapse. This service offers peace of mind so that you can focus your energy elsewhere.

Even more services

The possibilities expand from there. How liberating would it be to have a go-to person for personal financial assistance? Do you need mortgage or personal loan information in order to purchase new assets? Simply contact your account manager. Do you need a copy of a check? How about a history of how much you’ve paid to a certain vendor during the year? Maybe you received a tax notice from the IRS. In the time it takes to make a phone call or type an email, your requests will be answered by an account manager who already knows your financial history and can respond quickly.

Family wealth management

While these services are obviously beneficial for busy executives and entrepreneurs, families of means can also benefit.

Your family office can help establish wealth transfer policies and help develop and implement distribution schedules to heirs, as well as annual gifting. Trended reports from year to year will show who has and will receive distributions, so heirs can plan for tax issues as well as philanthropic and investment opportunities.

Second or third generation heirs may need help managing the wealth they’ve inherited and growing it for future generations. A family office can serve as a hub with spokes reaching into the areas of taxes, family law and estate planning. They can recommend trusted providers in investment management, and educate families on how to maintain wealth with tax and estate planning or through the establishment of trusts. They can even help create a family foundation that provides an ongoing legacy of charitable giving to issues that are important to the family.

Family care

Another generational issue is caring for aging parents. A family office can help with day-to-day matters for children overseeing finances for their parents, including ensuring that medical and household bills are paid. This can be a comfort to those who may not live near their parents or for siblings who share the responsibility of care. Having an account manager outside the family who knows the family and is reporting to each of the parties involved in the same manner, offers transparency to help maintain family harmony.

Property management

Property owners with multiple homes or investment properties could also benefit from the organization and financial management of a family office. Financial record keeping can be maintained in one accounting software and reports can be generated by property. These reports can identify which properties are performing well and which need attention.

A family office may be a service you’ve needed but either didn’t know existed or didn’t think was a practical option for you. They offer specialized and personalized professional services to help your family preserve its wealth and prepare the next generation, ensuring your legacy continues for generations to come.

Jacqueline Weiss is a member of the family office financial services team in LBMC’s wealth advisory division. She can be reached at jweiss@lbmc.com or 615-309-2459.

Have you considered family office services?

Publication

The Tennessean