Main task of the Family Office - RSM TACOMA Family Office Global
Main task of the Family Office

The primary objective of the Family Office is to care for a family. The care is based on a holistic approach.

Family Offices primarily focus on the management and comprehensive administration of a family’s wealth, create tools that allow the family to efficiently protect and develop its assets, help plan individual key activities, provide tax, accounting and legal advice, assist with property management, plan philanthropic and similar activities.

Until recently, Family Office services have not been in great demand in the CEE region as it takes many years for a necessary environment to develop. However, today, the founders of family businesses gradually find themselves in a situation when they plan their retirement and must seriously consider issues such as asset consolidation, management simplification, setting up adequate tax regimes, as well as one of the most difficult decisions – choosing a suitable form and method of transferring the assets to the next generation.

The role of the Family Office is to be an active partner and a co-organiser of this process.

Developed markets distinguish between a single-family office and a multi-family office. The difference is obvious. In the first case, all services are directed at one family, while in the other case, several families are serviced by the Family Office, which provides greater efficiencies by spreading the costs for the services across more than one family.

Globally, a very dynamic increase can be seen in the demand for services from Family Office type institutions. This is a result of increased wealth accumulated by new families arising from factors such as economic globalisation and the development to new technologies. An efficient asset management then requires truly professional expertise and resources that are quite hard to create within one family.

The Family Office constitutes a team of experts who have one objective: creating an environment in which the wealth will not lose its value despite changes between generations and external factors, such as various legislative and tax amendments.

How do Family Offices help their clients?

Fundamental activities of the Family Office include:

Asset planning

One of the Family Office’s key activities is to help the family in the process, starting with planning and structuring, asset creation, to asset transfer to the next generation.

From a long-term perspective, wealth planning is an exceptionally important process. At the same time, increasingly stricter regulations (involving tax and accounting changes) place greater demands on families in terms of knowledge of tax and legal rules as well as the ability (and experience) to somewhat anticipate such changes.

The main objective of the Family Office is to eliminate as much as possible the threats that could have an adverse impact on the family’s business and assets.

One of the threats also is trans-generational wealth transfer. History shows that the essential part of wealth is built in one generation. At the same time, statistics reveal that 60% of the wealth gradually disappears during the third generation, primarily due to the fact that the family has not paid sufficient attention to this issue.

Other threats, which the family does not realise or has no reason to attend to, include events such as those associated with asset freezing (for any reason), premature death of a key member of the family and related probate proceedings (which can take longer than expected due to external factors), marriage disputes and disputes regarding asset transfer. These risks and, to a certain extent, nervousness of the family and the community around it can be reduced by clear, pre-defined rules.

Succession planning

In a family’s life, succession can represent one of major challenges that affect its life for many years. Succession planning directly involves the family, in terms of defining a family’s new leader after the original head of the family decides to take a back seat. However, this also involves changes in companies in which the current leader is active. In this respect, the Family Office can give plenty of support.

In a simpler case, the leader is a member of the family and his future role was naturally defined long ago. In a more complicated case, none of the children are suitable for the role or are willing to assume the role. Then it is up to the Family Office to facilitate, by agreement with the family, asset transfer to a suitable institution (such as a foundation or a family holding), define the terms of its operation, payments of income and individual responsibilities.

Reliable planning and ensuring continuity in family asset management is a primary precondition for preserving the value of the wealth and the control the family has over the wealth.