Our International Estate Planning Attorneys Explain How to Determine if You Need a Trust or a Family Office
As your wealth increases, you may find yourself wondering if a trust is the best option for managing your assets or if you should consider creating a family office. Family offices, historically a privilege reserved for elite billionaires such as the Rockefellers and Rothschilds, are increasingly becoming a preferred method for handling personal and professional needs. MEG International Counsel assists clients with creating both trusts and family offices. Let’s look at how you can determine which option is the right choice for you and your family.
Purpose
A trust focuses on asset management and protection, estate planning, and distributing income or assets to beneficiaries. Our high-net-worth clients from Mexico and Latin America use trusts as part of their overall strategy to safeguard intergenerational wealth.
In comparison, a family office is a private wealth management advisory firm that serves ultra-high-net-worth individuals or families. It is a comprehensive solution that can include wealth planning, tax services, philanthropy, and even lifestyle management.
Structure and Control
A trust is a legal entity. The grantor gives control of the assets to the trustee, who then has a fiduciary duty to manage the assets in the best interests of the beneficiaries according to the trust's terms.
A family office is a private company or service firm. Control remains with the family, who make decisions regarding the family's assets and wealth. The family office staff provide advice and administrative support.
Flexibility and Scope
Trusts adhere strictly to the terms set out in the trust agreement. They are not as flexible in terms of adapting to changing circumstances or broadening their scope of services.
In comparison, a family office can easily adapt to the changing needs and priorities of the family it serves. Its scope can be personalized to encompass every aspect of wealth management and family services.
Cost and Accessibility
The cost of setting up and maintaining a trust is lower than running a family office. This means that trusts are accessible to a broader range of people, not just ultra-wealthy families from Mexico and Latin America.
A family office is more expensive to operate due to the comprehensive and personalized services they offer. A single family office is the most expensive type since it only serves one family. Multi-family offices and outsourced family offices are more affordable because they work with several different families at the same time.