INSIGHT

What is a family office? Tips to protect your wealth and legacy

Kris Marney • April 15, 2025

Your family has big dreams. But using your resources to turn those dreams into reality can be overwhelming. With so many decisions to make and responsibilities to juggle, it’s easy to feel lost.

And when things get convoluted, it’s not just the finances that suffer—your family’s legacy and dreams can also be obscured.

A family office is designed to help high-net-worth families navigate these challenges. Family offices align financial decisions with your family’s values and goals, ensuring your resources are used to enhance your life and the lives of those who come after you.

Today, we’ll dive into the value of a family office and provide you with the knowledge and tools to maximize yours.

What is a family office?

A family office is a private entity that oversees and manages the financial affairs of high-net-worth families.

It serves as a centralized hub for coordinating financial decisions, investments, and other family-related activities, ensuring alignment with the family’s values and goals.

How does a family office work?

A family office operates by integrating various financial and administrative functions under one umbrella. This includes managing assets and investments, financial planning, tax planning, overseeing philanthropic efforts, and coordinating family governance.

The operational procedures typically involve a team of professionals who work closely with the family to implement strategies, manage day-to-day operations, and ensure long-term financial stability.

What are the most common types of family office structures?

When establishing a family office to manage significant wealth, you can choose from four main structures, each with distinct characteristics.

Virtual family office (VFO) is a flexible arrangement where family members manage core financial functions while outsourcing specialized services to external advisors. This approach provides access to diverse specialized knowledge without maintaining a full in-house team, making it cost-effective and scalable, though it requires significant coordination effort from family members.
An embedded family office integrates financial management functions into an existing family business, using the company’s resources and infrastructure. While this structure offers cost efficiency and familiarity with family assets, it can blur lines between business and personal matters, potentially creating privacy and governance challenges.
A single family office (SFO) serves one family exclusively, providing customized financial, legal, tax, and operational services. This structure offers complete control over decision-making and operations, with high levels of privacy and customization. Though operational costs are much higher, a single family office provides independence from family businesses and is particularly suitable for ultra-high-net-worth families.
A multi-family office (MFO) manages wealth for multiple unrelated families, pooling resources to offer a broader range of services at lower costs per family. This arrangement provides access to support and investment opportunities through economies of scale, though services may be less tailored to individual family needs and families have less operational control.

Each structure has distinct advantages and limitations, making the choice dependent on your family’s specific wealth circumstances, long-term goals, desired level of control, and resource availability.

What is a family office responsible for?

A family office is responsible for a wide range of activities that can be broadly categorized into high-level strategic functions and day-to-day operational tasks.

Big picture family office responsibilities

At a strategic level, a family office focuses on:

Setting and achieving long-term goals, including the family’s mission, vision, values, and legacy plan
Developing coordinated investment, compensation, and tax strategies
Facilitating communication and education among family members
Planning for succession

These responsibilities ensure that the family’s wealth is preserved and grows in alignment with their values and vision.

Day-to-day family office responsibilities

On a day-to-day basis, many family offices handle tasks such as managing staff, accounting, payroll, property management, philanthropic initiatives, and investment portfolios.

It also oversees administrative tasks like insurance management, tax compliance, and legal affairs.

Additionally, the family office may coordinate family events, educational programs, and other activities that foster unity and shared purpose among family members.

Depending on the size, scale, and complexity of the family office, these tasks are often managed by an individual or larger team within the family alongside specialty advisors in required areas like estate planning and trust administration, investment management, financial reporting, and more.

Lifestyle family office concierge services are also gaining popularity. This entails supporting wealthy families in tasks like travel arrangements, lifestyle management, educational and cultural enrichment, and luxury investments like art.

Why set up a family office?

Ultra-high-net-worth individuals (UHNWI) and families often consider establishing a family office due to the complexities of constructing their vision and effectively managing their assets in a way that supports that vision.

“Setting up a family office brings all the services a family needs, whether outsourced or internal, under one umbrella to aid in strategic planning and timely decision making. Without having to manage the day-to-day complications of a diverse portfolio of assets, the family can plan for their legacy and provide regular oversight to that plan.” – Kris Marney – Director, Advisory

Common challenges that prompt a family office

Family offices are as unique and storied as the people who create them.

As such, every family experiences unique challenges and pain points that cause them to consider establishing a family office. Many find themselves navigating:

Complex financial planning and asset management, including investments, property, and collectibles
Detailed estate planning, succession planning, and wealth transfer needs
Overgrown financial and accounting administrative duties
Conflicting and competing financial advice among family advisors
Cross-country or international tax and financial obligations
Specific wealth-focused goals like philanthropy, acquisitions, or divestitures

And so much more.

Let’s take a look at an example. For instance, a family with significant real estate holdings and multiple business interests might struggle to manage these assets efficiently without a centralized entity. A family office can help streamline these responsibilities, ensuring financial decisions align with the family’s goals.

Benefits of constructing a family office

The benefits of a family office extend beyond mere financial management. It serves as a strategic tool for preserving intergenerational wealth, building a lasting legacy, and protecting both tangible and intangible assets.

For example, a family might establish a family office to help ensure their art collection is preserved and passed down to future generations while supporting philanthropic efforts that reflect their values.

Additionally, a family office can facilitate estate planning and trust administration, providing a structured approach to wealth transfer and succession planning.

By establishing a family office, families can also focus on philanthropy in a more organized and impactful way. This might involve creating a foundation or supporting specific causes that align with the family’s mission and values.

Overall, a family office offers a comprehensive framework for managing wealth, fostering unity among family members, and achieving long-term goals that transcend financial success.

Our Family Office Services Team customizes your family office experience around three high-level goals: simplicity, strategy, and specialization, to help ensure your entire financial ecosystem is built around your unique vision.

Ongoing challenges of running a family office

Once a family office is established, ongoing management presents its own set of challenges. Managing a family office independently or with a disjointed team can be particularly daunting. The complexity of financial, tax, compliance, and legal matters requires a high level of specialization and coordination.

Ensuring that all aspects of the family office are working together seamlessly is crucial. This involves aligning financial decisions, investments, and administrative tasks with the family’s goals. Without a cohesive approach, it’s easy for different components to become disconnected, leading to inefficiencies and potential misalignments with the family’s vision.

Moreover, effective family office management requires identifying strategic opportunities to enhance the family’s wealth and legacy. This involves leveraging tools like financial modeling, forecasting, and reporting to make informed decisions.

Strategic support is essential for navigating these complexities and ensuring the family office is optimized to support the family’s long-term objectives.

By recognizing these challenges and opportunities, families can better position their family office to achieve its full potential. This might involve seeking professional guidance to help ensure all elements of the family office are working in harmony and that strategic opportunities are identified and capitalized upon.

How can a family office protect your legacy?

Your legacy is a living, breathing entity that exists in you, your family, and the incredible work you do for each other and your communities. As such, it’s precious and deserves protection.

Protecting your family’s legacy involves more than just preserving wealth; it requires a thoughtful approach to aligning your financial decisions with your values and goals. Here’s how a family office can help you do that.

Define your family’s “why”

A family office plays a crucial role in this process by helping you define your goals, vision, values, and purpose. This foundation establishes a culture within the family office that guides all decisions and helps to ensure your legacy is built on a strong, principled base.

Build intergenerational wealth strategies

A key aspect of legacy protection is developing strategies to build and maintain intergenerational wealth. This involves creating a long-term plan that considers the financial needs and aspirations of current and future generations. By doing so, you can ensure that your wealth continues to support your family’s goals and values over time.

Employ coordinated tax planning

As the years go by, tax burdens can chip away at your family’s wealth. Effective tax planning is essential for minimizing tax liabilities and maximizing the wealth available for your family and the causes you care about.

A family office can help coordinate tax strategies across different assets and jurisdictions, ensuring you retain more of your wealth for what matters most.

Create efficient asset transfer strategies

Ultra-high-net-worth individuals and families often run into several questions when passing their wealth onto the next generation:

What’s the most tax-optimized vehicle for transferring wealth (trust, investment accounts, etc.)?
How should I pass on tangible assets like a house, boat, plane, or valuable collectibles?

And many more.

Transferring real estate, art, or collectible cars to future generations requires careful planning. Strategies like trusts can help ensure these assets are passed down efficiently, minimizing legal and financial complexities.

A family office can assist in setting up and managing these strategies to protect your tangible and intangible assets.

Offer ongoing financial management

Effective ongoing financial management is crucial for ensuring a family office operates smoothly and efficiently. This involves several key components:

Reporting and modeling
Back-office operations
Financial statements and compliance
Human resources and staff management
Financial software solutions

By focusing on these aspects of ongoing financial management, a family office can ensure that it is well-equipped to handle the complexities of managing wealth while supporting the family’s long-term goals and legacy.

Provide comprehensive education for future generations

Protecting your legacy involves educating the next generation about their responsibilities and roles in managing the family’s wealth.

And this education is integral. Grim research uncovers that 70% of families lose their wealth by the second generation. More alarming still, 90% of families will lose it by the third.

At BPM, our family office team can facilitate ongoing education and training programs to help ensure younger family members understand the importance of responsible stewardship and are equipped to make informed decisions about the family’s assets.

Create a lasting impact with your family office through BPM

When structured and operated correctly, a family office can make an immense impact on your family and community

At BPM, our Family Office Services team is dedicated to helping wealthy families navigate the complexities of starting, operating, and maximizing the value of their family offices.

“BPM acts as the quarterback to bring all the family’s advisors together in support of their goals and long-term planning.” – Kris Marney

We focus on simplicity, strategy, and specialization to ensure your entire financial ecosystem is built around your unique vision. Our approach combines deep skill with a personal touch, empowering families to achieve their goals and protect their legacy.

If you’re interested in learning more about how BPM can support your family office, book a call with our team.