Family offices, asset protection and succession planning

It is not unusual for individuals and families to set up structures, such as asset protection trusts, to protect or control the assets they have created. Have you ever thought of creating a family office? Have you looked at succession planning strategies?

Asset Protection and succession planning may be needed from uncertainty caused by changes in government policy in the jurisdictions where the family members or assets are based.

Protection may be needed against the next generation frittering away assets passed down to them. Often, a grandparent or parent may wish to protect their children from their own exuberance and ensure monthly allowances cover necessary expenses only, until the child reaches a certain age when they might be expected to be more prudent with a large capital balance becoming available to them.

A family may wish to protect capital and protect money from future third party claims from potential creditors or matrimonial claims from future spouses or even government rules on forced heirship.

A family may wish to pass on their assets to the next generation without suffering penal wealth or inheritance taxes. They may simply wish to simplify probate issues or avoid family disputes in the event of death.

Different members of the family will have different needs at different stages of their lives and it is often useful to have an overarching structure with the interests of the family as a whole at heart.

As family members base themselves in different jurisdictions, it is essential that someone maintains a high-level view of the overall needs of the family to ensure that an action deemed to be in the interests of one family member does not result in an adverse reaction somewhere else in the structure.

This overarching structure of asset protection will often take the form of a family office or Private Trust Company (PTC) which takes care of all aspects of succession planning strategies and family office investment for an UHNW family.

The first step along this road to the creation of a family office may be to transfer management of several disparate companies and trusts to one central trusted advisor to ensure there are no overlaps, gaps or contradictions in the advice being received. Often as the structure becomes more complex, this may need to be formalised into a family office structure with staff members with specific skills assigned to specific tasks to ensure nothing is missed.

The next step may be to set up a Private Trust Company to enable family members to become involved in the strategic direction of decisions taken on behalf of the family. A PTC allows trusted advisors to sit alongside family members on the board overseeing the management and direction of the underlying trusts and companies. Often this benefits the professionals as it allows the family to pass on invaluable knowledge and experience, especially if the investment is in a business where the family has some history.

Typically, the family office will coordinate the creation of trusts and companies to ensure the optimal protection of underlying assets and mitigate tax burdens on those assets and tax consequences of distributions of income or capital to family members.

The family office should be able to provide qualified individuals to administer the trusts and companies in suitable jurisdictions and have the underlying background knowledge to understand the consequences of actions taken both for the particular asset and the family as a whole.

The family office should be able to provide current relevant tax advice on the ownership and management of high value assets such as real estate, boats and aircraft as well as moveable assets such as artwork and jewellery. Often, these

changes in local tax legislation call for a new tax residency.

A good family office will be able to either provide all these services in house or call upon a trusted network of professionals to ensure the family has one point of contact for issues of wealth planning, (succession planning and estate planning) wealth management (investment advice, mergers and acquisitions) tax planning and tax compliance, asset structuring and charitable foundations.

It should also advise on family governance helping draw up family constitutions, family councils and set up and manage Private Trust Companies. This helps the family put the assets at one step removed from the family members whilst retaining the ability to give input into the management of the underlying assets.

It’s important to distinguish between the work of a ‘Single Family Office’ which serves just one direct family focusing mainly on investment planning and asset protection and a ‘Mult-Family Office’ which serves the wider family group and may involve 3 generations at the same time, managing not only basic investment and succession planning needs, but also looking at more complex family matters.

MGI Midgley Snelling in the UK has advised many wealthy families over the past 80 years on the set-up and management of Family Offices and PTCs as well as simple trust/company asset holding structures. They have the in-house expertise and experience to cover all the above situations and the MGI network of 10,000 professionals around the world to call upon to ensure the client receives the correct advice anywhere in the world. For more information, please contact Jonathan Farrow at

Posted in Business News.