Virtual Family Office

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For many people, the work they’ve done throughout their entire lives has been to establish a solid foundation for their family. Once you reach a certain level of private wealth, you may find that the strategy, administration, and other factors that go into managing it in your and your family members’ best interests become a significant undertaking. It may be time to consider the many beneficial services offered by a virtual family office.

What Is a Virtual Family Office?

The family office definition includes a variety of different services required by high-net-worth families. Traditional single-family offices serve just one family and are generally suitable for families with $250 million or more in assets. Research from Mordor Intelligence shows that the average family with a single-family office has a net worth of $1.2 billion.

 Of course, you may require family office services long before reaching these levels of wealth. Multiple families can rely on professional services through another type of family office structure, a multi-family office. This establishes a similar family office structure, except that assets come from multiple families.

 A virtual family office (VFO) extends access to high-quality wealth management services to a broader range of families. Wealthy but not ultra-high-net-worth families can take advantage of industry-leading advice and state-of-the-art family office technology without incurring the high costs of running an independent office.

 Virtual offices can range in the variety and level of services they provide, so make sure that you choose one that can provide expert advice and service in each of these vital areas.

1.  Investment Management

As your family’s wealth grows, professional investment management becomes more important. When comparing a family office vs. hedge funds as an option for your assets, consider the benefit that active planning and advice for your unique situation can have.

 The investment management that a virtual family office provides is carefully tuned to your overall finances and plans for the future. Make sure that any virtual office you work with can provide sound investment management focusing on both total return and capital preservation.

2.  Tax Advisory Services

High-net-worth families can face significant tax challenges. This is particularly true if you still have an operating business. You need to be sure that any external service you rely on is able to keep up with the complexities of your tax situation.

 A good virtual family office will be able to provide you with optimization strategies to make the most of your income and wealth. Professional entity structuring can provide further tax benefits as well.

3.  Insurance Management

Insurance is another important area that you need your virtual family office structure to cover. You may have a wide range of assets that require different insurance measures, along with any number of insurance concerns related to a family business.

 A virtual family office can ensure that you and your family are properly protected by insurance. Working with professionals to consolidate and optimize insurance can save money as well, as potential insurance savings can be greater than any virtual family office fees.

family office definition

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4.  Succession Planning

As your wealth and your family grow, succession planning can quickly become a full-time job. A family office can greatly streamline succession planning and ensure that the proper entities and legal frameworks are in place to fulfill your ultimate wishes. Whether establishing inheritance or charitable endowments, going with the professionals makes the process easier.

5.  Planned Giving

Charitable giving is a great way to make a social impact while getting a reward on your taxes. In addition to individual donations, high-net-worth families often take advantage of foundations and charitable trusts.

Foundations are a type of nonprofit structure. High-net-worth individuals start foundations, so that they don’t necessarily need to find a worthy recipient for their giving at the moment they choose to donate. Instead of having to find a charity to accept the donation you are looking to give at the moment you are prepared to give it, you can donate to your foundation which will manage those finances and give when appropriate at a later date.

Charitable trusts are also a great way for individuals to manage their giving. A charitable trust takes a large donation and makes incremental payments to either the trustor (remainder trust) or a charity (lead trust) for the lifetime of the trustor, paying out the remainder to the other at the end. This is a good way to reduce one’s tax burden on bequests.

Your family office should be able to establish and manage foundations and trusts to accommodate your giving plans. It should include the tax and legal professionals necessary to ensure that you can reap the tax benefits when you need while giving to causes when they will make the biggest impact.

6.  Real Estate Management

Wealthy families can often find themselves with a variety of properties, whether as primary residences, vacation homes, or investments. Virtual family office services can help simplify managing the administrative and accounting tasks that go into owning, buying, and selling these properties. You can also take advantage of tax services to minimize your property taxes.

Further, if those properties are sitting empty or have common areas, they will need to be maintained physically. Your virtual family office should be able to secure and manage concierge services to ensure that your property retains its physical value.

Find the Virtual Family Office for Your Needs

These are the fundamental elements that can provide you and your family with peace of mind when working with a virtual family office. However, it’s also important to find the right team to work with you personally.

 The Sharp Financial Group’s virtual family office services put a team of CPAs and other financial professionals at your disposal to ensure a 360-degree view of your family’s wealth and business. We can provide comprehensive support in all of these important areas and more.

 Get a free consultation with one of our advisors to discuss your financial or Family Office-related questions.

*Check the background of your financial professional on FINRA's BrokerCheck

**The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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