Joseph, I want to get to you. You work with a lot of family offices. You see a lot of pain points
on the legal side, most likely. Give us an idea of, with the family offices you work with,
what are the most painful things that are going through now? Is it execution? Is it governance?
Is it bringing the next generation on? Where do you see as the biggest pain points now?
I guess I could think of a few ideas. So one issue is that when you have very elderly people
investing, sometimes it makes sense to not invest in assets which cannot be easily divided.
So if you have these long-term investments and then they have to be divided between your
stepchildren, let's say real estate investments, which really need to be...
sold and divided because the stepchildren and the children might not want to be partners. So when
you have groups of people who might not want to be partners and they have assets that cannot be
divided, it becomes a big problem. So I think as family office owners get older,
they might want to keep in mind thinking about what's going to happen afterwards when they need to
be divided when they look into the types of deals they want to get into. Maybe even a mix is okay.
Sometimes there are buy-sell agreements that could be implemented, but just to ignore that is not
a good idea. Now other issues that come up are clients who set up asset protection trusts or estate
tax planning trusts, but they don't follow the rules. So that is a big, big problem. As I said
before, a lot of people just don't understand the rules. They will never explain them clearly.
For example, dad wants to manage everything, but he still wants to have it asset protected and
protected from estate tax. It doesn't always work that way. There are rules that have to be
followed. Dad can't just log in online and do whatever he wants. He can't always just put his own
assets into a trust and control himself. So what's very, very important is to fully understand the
rules that were created for you you know every case is different um whether whether you have
trustees and you need investment advisors and you need distribution uh approval you know make sure
you know what your rules are and that you follow them because there are many cases of of you know
creditors coming after trusts and they could break it um estate tax audits they could come in and
show that yeah dad really uh treated his trust as his piggy bank even though his wife was a trust
mom was a trustee and so it's very important to follow those rules it's it's what they don't know
they don't know and and it's amazing because a lot of families or the people that create their
wealth from a business i swear it's like they forgot how they got successful they'd hire the best
people they'd go through, I see Richard laughing, they'd go through and they'd have quarterly
meetings and they'd have objectives and they'd talk about what their goals are and they'd have
parameters of how to do the business and then they'd forget about it all. And you have to do that.
You have to, just like a property, you have to start with a strong foundation, governance. I can't
tell you how many families are like... They're just blown away, you know, because you need that
communication. You need that understanding, especially if you want your legacy and your monies to
live on. You have to include all the family members. They need to be a part of it.
And, you know, you need to pay for good people. Too many families,
they just don't want to pay. And so it's a matter of... You get what you pay for.
Yeah. You do get what you pay for, but even hiring, I mean, it's really crazy.
But it's really understanding what those, what I call soft issues are, right?
Family councils, investment policy statements, investment parameters. You asked about that before.
They don't have any. The majority, they don't have any. And then the governance, and how does the
family communicate? And so that's where they need to start, and that's the biggest trouble.
from a family's perspective so let me touch up on that do you recommend you know for the family
offices you work with because they have it so unstructured do they hire someone internally or hire
a service provider to outsource everything you know that's a good question um you know the
definition there's different definitions of family office from our perspective it's worth 250
million or more typically a family and tom can probably confirm this or whatnot doesn't hire an
internal cio till they have about 750 million so you need scale You do,
which sounds crazy, but that's where the numbers come from a lot of times. But that's when you can
really start using a real multifamily office. And those are not just investments.
If they're just doing investments, they're an RIA. And going into the governance, because they're
going to know who to talk to, whether it's on the legal side, because they're not going to have a
lawyer internally. And then they'll just graduate eventually to the point where they hire somebody,
but usually at least when they do, that's one person and they're the quarterback. Yeah,
I have to agree with DJ there. You know, I even go higher on the number.
I think to really be a single family office, you should have a billion dollars investable because
it's expensive, right? And if you really want to have, you know. An investment team,
an accountant team, a legal team, right? It all adds up, right? You can't say, hey,
I have $100,000 net worth and all of a sudden you're a single family office, right? So it doesn't
make any sense. It sounds great to say you're a single family office, but at a certain size, you're
better off just being part of a good multifamily office that can provide you those services so that
you can focus. on on on what you're you're good on um what you're good at and you know i think we
were discussing this you know um accounting and taxes it's so important like the alpha that can be
created in just understanding your tax structure um can can be a light a lifeline of a difference
of whether you're paying capital gains or you're, you know, the difference between structuring it
as debt, right? Where, you know, you have to pay ordinary income versus preferred equity where,
you know, you're paying capital gains, right? So having someone that really understands those
things are really important. I mean, I'm sure you would agree on the tax part, right? It's back
down to it's foundational things, right? Just the basics, the fundamentals.
Hi, I'm Richard C. Wilson. Our community has closed over $1 billion of transactions.
We have over 16 million registered members across 100 plus LinkedIn groups.
And I own billionaires.com and run Family Office Club. Over 19 years, we've hosted 300 live
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