Family Office Services

  • Family offices have become a force to be reckoned with throughout the past several years. A tenfold increase in the number of family offices from 2008 to 2018 and the amount of wealth managed within them – $4 trillion by the end of 2018 – demonstrate a significant disruptive force in the wealth marketplace.
  • Because many families' wealth structures are worth more than many private operating businesses, they need to be managed with the same professional skill and care. After all, the family wealth structure is the family business.
  • Holland & Knight's Family Office Services Group serves as private general counsel to family offices in the U.S. and abroad, assisting with the legal and business matters. We provide clients with a 360-degree view to the potential benefits that our advice has on the various structures in place.
Family Office Services

Overview

Holland & Knight's Family Office Services Group, which includes attorneys and professionals from many practices across the firm, regularly provides guidance and advice regarding the best structure to suit the family's objectives, whether it be starting with a virtual family office, creating a single family office or even a private trust company. We act as private general counsel to families and work with them to form the appropriate family office structure, develop the documentation for its governance and suggest best practices for day-to-day management.

Beyond having extensive experience in virtually all of the legal issues family offices encounter, additional focal points of our practice include succession planning and crafting agreements among family members, such as family constitutions. We represent a multitude of closely held businesses and provide counsel on complex shareholder and operating agreements. This often enables those who contribute the most to the welfare and betterment of the family to be rewarded appropriately in the form of buyouts and preferred status while still providing security to the family members who choose different paths.

Determining what services should be performed in-house or hired out, subsequent coordination of the suite of professional advisors and assuring continuity of services are important parts of the discussion that our attorneys facilitate with our family office clients.

Benefits of a Structured Family Office

A well planned and maintained family office structure should enhance the value of the family's resources, letting the family live well without being burdened by an inefficient structure. In addition, having a "bird's-eye view" of the structure to see how it works while the decision makers are living should not be underestimated.

The origins of family office structures include privately owned entities established by wealthy families to manage their wealth, plan for their families' financial future, engage in investment opportunities and provide other services to family members. With so much at stake, Holland & Knight provides a complete suite of services aimed at ensuring the proper management of the family office from an administrative standpoint. Many families of wealth have come to realize the numerous benefits of establishing a structured family office, including:

  • enhanced control
  • privacy and customization of their asset allocation
  • wealth and risk management
  • overall legacy plan

Not all family offices provide comprehensive services. For example, income tax reporting may continue to be handled by longtime accountants. Similarly, some family offices oversee concierge services, such as home construction projects, while others decline to provide personal services to the family. Our lawyers help evaluate the interests of the fiduciaries and beneficiaries to minimize the potential for conflict. Sometimes, a senior generation wealth provider is the sole point person for investments and decision-making, with no designated back up in the event of incapacity or death, and no mechanism for creating or funding an administrative structure. In such situations, we proactively discuss with clients the potential for loss of value and confidence if there is no structure or source of funding in place in the event of incapacity or death of the senior generation provider. We work with clients to determine when and how to create the structure to be operational and have the confidence of the family when the senior generation provider is no longer living.

Deductibility of Family Office Expenditures

Holland & Knight attorneys have extensive experience structuring family offices to permit deductibility of its expenses. The 2017 Tax Cuts and Jobs Act suspended the rules that previously permitted deductions for expenses incurred for the production of income. Accordingly, the distinction between business expenses and investment expenses has assumed a greater significance, and we regularly work with family offices to best position the enterprise as an operating business enabling the family office to claim an ordinary and necessary business expense deduction.

Preserving and Protecting Family Wealth

The professionals in our Family Office Services Group routinely develop custom techniques to protect clients' wealth from potential liability, including promoting transparent and conflict-free transitions among generations in closely held businesses. We tailor plans for family members, giving consideration to the business impact, tax liabilities, personal risks, insurance coverage, asset holdings and philanthropy.

High-net-worth families also turn to Holland & Knight for our experience with sophisticated trust, administrative and estate planning. Our lawyers employ varied strategies to successfully protect and transfer wealth to family members and/or charities.

By necessity, our services extend beyond structure, operations, investment coordination and records management, into domestic and international tax, creditor protection, incentivizing family office personnel, labor and employment matters for domestic workers, nondisclosure agreements, regulatory matters, prenuptial agreement and divorce questions, real estate matters, architect agreements, insurance, art, aircraft, boats and intellectual property. Above all, discretion and privacy are paramount.

360-Degree Review

A 360-degree review addresses the gap between business planning and estate planning. We provide a formal analysis of a client's existing business structure and governing entity documents, current estate plan, cash flow from all sources, charitable goals, income tax issues, planning strategies to minimize transfer taxes, liquidity issues, domicile, distribution of collectibles, family business succession planning and exit strategies.

Representative Engagements

  • A client family with young children planned to travel abroad for a year with a paid tutor. We worked with the family's accountant to address income tax reporting requirements and compliance issues for wages paid to the tutor in the various countries where the family planned to stay for several weeks or months at a time.
  • A client family with a large multiacre compound that included water features and equine facilities was hosting a large charitable event on the property. We worked with the client's family office and the charitable organization hosting the event to create waiver of liability documentation for attendees, including policies regarding the use of tobacco and drugs on the premises, prohibition on the taking and posting of pictures and details regarding the property and the owners on social media, as well as the supervision of minors, to be included as part of the event's online registration. The family and charity wished to avoid a sign-in process on the evening of the elegant affair by making the waiver of liability and rules for entering the premises as routine as possible.
  • A wealthy client had been paying domestic household employees "under the table." The client was risk averse in every other aspect of her life, but did not realize the legal implications of how she was paying her employees, nor the state law requirements concerning payment of overtime. At the same time, the client sought to terminate the services of one longtime employee. Working together with a labor and employment partner at Holland & Knight, we helped the client navigate the legal and social requirements to address the payroll and termination issues, including prohibitions on discussing her employment or the properties in which she was employed. We regularly provide simple nondisclosure provisions in employment agreements to ensure, to the extent possible, privacy for the family while not discouraging the potential employee from accepting the position.
  • A wealthy client couple sought to have a child through the use of a gestational surrogate and asked for our assistance to review the surrogacy contract, as well as to review a number of longstanding family irrevocable trusts to determine the child's status as a beneficiary thereunder. Working together with a California-based contract litigation partner, we reviewed the surrogacy contract and suggested changes for consistency in the approach throughout and made sure that the clients understood the risks and costs.
  • We routinely review architectural and construction contracts for clients building and renovating substantial properties. Our construction litigation attorneys routinely assist with the review and resolution where contractors and subcontractors do not perform as anticipated, securing lien releases and assignments of contracts as needed.
  • We assisted a client with a valuable piece of art that was about to be sold at auction when a late claim of competing ownership arose, which required addressing the claim with authorities overseas in a manner designed to avoid adverse publicity and diminution in value should the claim be determined to be untrue.
  • We assisted a multigenerational family business operation in developing a family office structure to provide centralized management of the family business ventures. This representation included restructuring more than 50 operating entities, with varied ownership interests between family and nonfamily members, to aggregate all of the family interests into the family office ownership structure. Our analysis also included representing the family on a potential sale of the operating entities to a real estate investment trust (REIT) to diversify the family investment portfolio.
  • We routinely negotiate contracts regarding the fractional ownership and rental of private business jets on behalf of our clients. We have been successful in the negotiation of additional short-leg waivers for our clients.
  • A client was being harassed by a former partner who threatened to release compromising videos of the client that would have had a detrimental effect on the client's reputation. Various attorneys worked to advise the client with respect to the complex issues involved and were able to successfully prevent the release of the extremely sensitive materials.

Holland & Knight's Suite of Services

Many of our competitors offer separate groups of lawyers that do not take a global approach to the family and do not understand the family and its needs. Other firms may refer a trust or estate dispute to a general litigator. At Holland & Knight, we work with our fiduciary litigation team that exclusively practices in this area. Additionally, across the firm, our professionals have a depth of experience in handling the unique needs of family office clients.

What Sets Holland & Knight Apart

We are committed to the long-term safeguarding of our clients' comprehensive interests – no matter what area of the law, business or family issues are involved. Our Family Office Services Group leverages the various practices and skills of more than 1,400 lawyers and other professionals practicing in Holland & Knight's 28 offices throughout the world.

Our clients utilize our Family Office Services Group to efficiently harmonize their family, businesses, investments, advisors, homes, fiduciaries and philanthropy. We do so by delivering industry-leading, customized services while working collaboratively with the family, its family office and its advisors.

Our attorneys' dedication to proactively anticipating our clients' needs and providing the highest level of responsive service gives Holland & Knight clients the confidence that their family's integrity and assets will be protected and preserved for generations.

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