<p>Clients from the CIS countries have recently been increasingly asked to organize a family office for them in one of the most prestigious offshore European jurisdictions and explain this desire in just four words: "We want a family office." In such situation it is extremely important to find out whether the client really needs a family office or he just needs a good account at a reputable private bank, life insurance in Switzerland and a good secretary.</p><p> </p><p></p><div><h2 class="justifyleft"><strong>What is Family Office?</strong></h2></div><p>There are a great many definitions of the term "family trust management company". The family office can be the family's main adviser, pool resources, organize and implement the transfer of the state from one generation to another, represent a single contact person for the whole family on proper preservation and state management. At the same time, family offices not only solve financial problems, but also affect the social aspects of welfare, and pay attention to the human factor.</p><p>The Family Office organizational form can be very different - from one person to a company with a staffed staff. At the moment there are two main types of family offices:</p><h3><b>1) <span style="text-decoration: underline;">Single Family Office – SFO</span></b></h3><p>Such family offices provide services to only one family. Since the level of costs for the maintenance of this type is high enough. These type is more suitable for families and entrepreneurs with a fortune in excess of 500 million US dollars.</p><h3><b>2) </b><b><span style="text-decoration: underline;"></span></b><b><span style="text-decoration: underline;">Multi Family Office – MFO</span></b></h3><p>Such a family office renders services to several families, related to each other by kinship ties or by a common business. The condition of each family usually exceeds $ 100 million. Multifamily offices can also be created, manned and managed by banks or trust companies.</p><p>In Switzerland and Liechtenstein, about 110,000 people are employed in the private wealth management sector. Not all of these specialists are Swiss citizens, many have come from other European countries. Workers of Swiss family offices are united by one thing: they possess the necessary knowledge, experience and qualifications for managing large private capitals. Switzerland and Liechtenstein provide such specialists with a platform for developing political and legal stability, traditional high level of private property protection, high AAA rating from Standard and Poor's. The Principality of Liechtenstein also completely lacks personal indebtedness.</p><p>For a thorough understanding family offices activities, it's important to understand the differences between a family office and a multi-family office.</p><div><h2 class="justifyleft"><strong>Differences between SFO and MFO</strong></h2></div><p>The Family Office creation for the maintenance of one family requires quite a large expenditure. If a client wants to have his own family office, he will have to spend a lot of money to create one. Here, both the costs of legal support and the IT infrastructure, and the search for qualified employees (to whom it is important to have a certain amount of confidence), reliable premises and much more.</p><p>Usually the Family Office staff consists of three people:</p><p>1) Head, who acts as an adviser. Usually this is a person whose family or entrepreneur knows and trusts him well and who is usually an experienced banker or trustee, a lawyer.</p><p>2) Administrator</p><p>3) Assistant</p><p>Experience shows that, as a rule, a wealthy family offers a lawyer, whom she trusts, to work exclusively for her. Then she makes a similar proposal to a trusted banker, and finally picks up this pair of qualified assistant. Only large entrepreneurs and families that have a very large fortune can afford such costs to manage their assets and ensure that they are in control.</p><p>However, it's in connection with luring the leading families of leading lawyers and bankers that the main problem of the family office is connected. Lawyers and bankers, whom HNWI lured out of solid investment banks and law firms, are gradually losing touch with their professional environment. It's about the same as locking a beautiful girl in four walls, making her four children and not waiting for her to become greasy and discouraged. Lawyers and bankers, working in large, serious companies, enrich their professional experience with new ideas and knowledge every day. The loss of communications threatens professional stagnation and a decrease in the efficiency of the family office. And it's very bad if the employees of the family office understand this, because once they understand it, they will leave to work in a multi-family office, a network of family offices, back to the bank or another family office, which will send them to conferences and seminars - to do networking and did not lose contact, but overgrew them. Who knows, maybe your employees will be able to turn your family office into a multi-family, and not run away from boredom.</p><p>Multifamily office is advantageous in that its costs are divided into several families or entrepreneurs, especially if services are provided by a well-known asset manager or trust company. Having analyzed in detail the expenses for the maintenance of the family office, many even very wealthy people decide that it would be good to separate such fixed expenses of families by 5. Often wealthy families create family offices with a direct calculation that other families with whom they have known for several generations, will join their family office and help turn it into a multi-family one. But in practice, this happens rarely and familiar families do not want information leakage in their circles. Out of caution and at their discretion, such families will prefer to enter a well-known and respectable structure that manages several family offices. They will not want to enter another family office. Benefits and benefits that an entrepreneur and his family will receive from participating in a multi-family office that is included in a personal property management consulting company or in a trust company. In this case, there is a "scale effect," which, although not always, reduces costs and costs for the family office, but increases the quality and reliability of the work.</p><p>In the activity such office leans on the big experience and knowledge thanks to long established and active operating communications with the trusted advisers, close friends and other competent experts. This makes the work more efficient, and the ratio of income and expenses is more pleasant and appealing to the client.</p><p>If the multifamily office is a part of an operating trust company, then compliance with legislative norms and management in such multi-family offices is initially ironically observed. Another advantage of a multi-family office in a large organization is the availability of qualified personnel who will not make mistakes in the event of an unforeseen absence of key members of the family office.</p><p>So what is a family office - a company or a trust? Well, let's try to understand the organizational and legal structure of family offices.</p><h2>Family Office organizational and legal structure</h2><p>It is easiest to register a family office as an LLC, a limited liability company. Initially, everyone does so, since this is a simple, regulated and recognized form of creating a legal entity. In Switzerland and Liechtenstein, there are no specific rules that regulate the formal operation of family offices. Once family offices begin to manage the assets of more than one person, they usually get permission from a self-regulating organization or financial market supervision authority to recognize them as banks or brokers (external asset managers).</p><p>Sometimes families load all the functions of the family office for one person, called "Treuhänder", but in fact, it is a trust manager or a trusted agent.</p><p>In Switzerland, the professional position of "Treuhänder" is not regulated yet and theoretically anyone can take such a position. However, there are professional bodies and self-regulating organizations that put forward certain requirements, which must match the person claiming the position of "Treuhänder". Competence, practice and diploma of education are needed.</p><p>In Liechtenstein, an individual can perform the duties of a "Treuhänder" only if it meets clearly specified requirements and successfully passed the exam organized by the Liechtenstein Financial Market Supervisory Authority. In addition, if an already passing exam "Treuhänder" wants to start independent activities in Liechtenstein, then, to carry out such activities again, it is necessary to meet certain criteria and obtain permission from the Liechtenstein Financial Supervision Authority. Thanks to the professionalism and long way to this position, "Treuhänder" is very respected and revered in Liechtenstein people and no matter how much money you have, you can not treat them like slaves, although some of the services that you can ask them may be and not quite classical. What services are provided by family offices?</p><h2>Family Offices Services</h2><p>Different and very different. Some family offices are used only as an asset management function and control the family's investments in various banks. Family offices consolidate investments, prepare tax reporting and maintain communication between the family and various offshore and foreign banks. Now, I hope, it became finally clear why the theme of family offices is so close to our blog. Family offices and their employees for HNWI and their families serve as a personal super-secretary. If they agree to a secretarial service, then it is up to them to take care of the selection of the crew of your personal airplane before organizing the services for the fifth dog's paddling of your youngest daughter. Family offices perfectly do such things as organizing the education of children abroad, obtaining visas, second passports, organizing parties and banquets, booking hotel rooms (concierge services).</p><p>There are even more multifunctional family offices that help their clients not only in managing bank assets, but also advise when choosing a holding structure for non-bank assets. Such family offices will clearly tell you how best to own factories and steamships in your case - from your personal name or on behalf of an offshore company, or on behalf of an offshore company that the trust owns. In fact, the question of who and how to register real estate, cars, private collections, horses, yachts - is extremely important.</p><p>It happens that the best family offices grow out of former sellers and resellers of offshore and foreign companies that have a well-coordinated team and knowledge of the types of organizational and legal structures of companies in such a number of countries that even the best Swiss Treuhänderu did not even dream of. In any case, the family office usually performs the functions of such counseling in close cooperation with the attorneys and lawyers. Family offices, with the support of specialized professionals in the right questions, advise asset owners on strategic issues both on existing offshore and foreign companies, and on various potential projects. Family offices prepare feasibility studies for new ventures and sometimes can offer their HNWI clients to transfer certain activities to more acceptable offshore or foreign jurisdictions.</p><p>In order to properly account for their actions and for the family situation, family offices prepare detailed and detailed reports that can then be used as evidence of compliance with tax laws.</p><p>Family offices deal with issues of charity and philanthropy, social responsibility and other value-oriented aspects. Sometimes the head of a well-to-do family in the family office is entrusted with questions of transferring the fortune to the next generation, developing methods for training the current generation of owners and the next generation in a responsible attitude to the inheritance of the state. Family offices can even develop guidelines for increasing the value of the estate.</p><p>The family office can be entrusted with the organization of annual meetings of all family members, on which all close and distant relatives gather each year not only to discuss financial matters, but also to select the next family leaders, and also to adopt the experience of the generation that was at the origin of the family and formed family values.</p><p>It is important to understand that, although the management company gets a lot of money for its work, it is very important for her to truly recognize her merits before the family. In fact, the family office becomes very close to the client, since if the office staff performs their work correctly, the activities of the family office contribute to the unification and strengthening of the family, builds loyalty to family values amongst individual members of the family, and especially the young generation, and helps build whole dynasties of entrepreneurs.</p><p>Past experience has shown that Switzerland and Liechtenstein as jurisdictions have proven themselves in the private service of wealthy families. To date, more and more multifamily offices are being formed in these jurisdictions. Undoubtedly, both beginners can have in the staff professionals with the necessary qualifications and even practical experience to meet the needs of the most demanding customers.</p><p><span style="color: #444444; font-family: Arial, sans-serif; font-size: 10.5pt; text-align: justify;"> </span></p><p><span style="color: #444444; font-family: Arial, sans-serif; font-size: 10.5pt; text-align: justify;"> </span></p><p style="text-align: center;"><em> Get more information about C<strong>astle Family Office</strong> capabilities, by writing us at:</em></p><p style="text-align: center;"><em> </em><em><strong><em><span face="Calibri" size="3"><span lang="EN-US"><span face="Calibri" size="3"><a href="mailto:info@castle-familyoffice.sg">info@castle-familyoffice.s<span style="text-decoration: underline;">g</span></a></span></span></span></em></strong></em><span style="color: #444444; font-family: Arial, sans-serif; font-size: 10.5pt; text-align: justify;"><br /></span></p>