Family offices deliver centralized oversight of investments, reporting, taxes, philanthropy and more. When structured correctly, they not only preserve wealth but also strengthen family bonds through shared decision-making and long-term stewardship.

Laying the Foundation

The most effective family offices are established well before a major liquidity event, such as a business sale or generational wealth transfer. Some families spin off a structure from the operating company while others build them from scratch. In either case, advanced planning reduces risk and ensures a smooth execution.

When anticipating a significant liquidity event, it’s critical to identify where the wealth will be held and by whom it will be managed, at least for the first year. Safe custody, institutional-grade reporting and a short-term investment strategy should be decided upon well before the liquidity event.

A phased approach is often most effective. Begin by focusing on core family office functions, such as custody, reporting and consolidated accounting, while outsourcing more specialized services. This will keep early-stage operations efficient and cost-effective. As the family builds confidence, additional capabilities can be brought in-house.

Acting early also provides a practical advantage. Selecting a master custodian in advance ensures assets from a liquidity event flow directly into secure, consolidated accounts overseen by the family office. Families that fail to do this, however, may have to rely on retail solutions, which can complicate asset management and introduce external pressure to retain funds.

Where Should You Locate Your Family Office—And What Legal Structure Should You Use?

Choosing the right location and legal structure shapes how your family office operates and accesses opportunities worldwide. Most families start near their business or primary residence, but as the family’s needs evolve, the office may need to adapt.

Key considerations when selecting a location and legal structure include:

• Political stability and rule of law

• Privacy regulations

• Tax and regulatory environment

• Access to skilled staff and advisors

• Availability of preferred legal structures (LLC, FLP, PTC, purpose trust, non-charitable foundation, etc.)

Six Best Practices for Family Office Management

Running a family office requires more than just financial expertise. It calls for strategic planning, strong governance and disciplined operations.

These best practices can help ensure a well-run, enduring enterprise:

1. DEFINE THE FAMILY OFFICE’S MISSION

It’s essential to be clear about why the family office exists. Is the focus on managing investments, facilitating philanthropic giving, preparing the next generation or overseeing wealth transfer? Some offices concentrate on a single goal while others support multiple objectives. A defined mission helps shape everything from staffing and service providers to reporting and decision-making.

2. ESTABLISH GOVERNANCE EARLY

Well-run offices clearly delineate roles and responsibilities between family members, staff and advisors. A governance structure, such as a family council, board or investment committee, can help ensure decisions are made efficiently and reflect the family’s goals. Clear bylaws and policies help reduce ambiguity and support accountability.

3. EDUCATE THE NEXT GENERATION EARLY AND OFTEN

Preparing rising generations to manage wealth is one of the most important—and overlooked—functions of a family office. Education shouldn’t be a one-time seminar or a last-minute handoff. Instead, it should be an ongoing process that builds financial literacy, decision-making skills and a deep understanding of the family’s values and legacy. This may include formal training, mentorship, participation in committees and exposure to the office’s day-to-day operations.

4. CLEARLY DEFINE THE SCOPE OF SERVICES

Family offices can offer a wide range of services, from investment oversight and tax planning to bill pay, trust administration and lifestyle support. Being specific about which services the family office will provide helps set expectations. It also allows the family to identify when additional specialists are needed. And as the family office evolves, revisiting the service menu ensures alignment with the family’s needs and priorities.

5. DEFINE STAFF ROLES AND RESPONSIBILITIES

Written policies that clearly define the roles and responsibilities of each staff member help ensure the family office runs smoothly. These should outline job descriptions, decision-making authority and reporting lines to avoid confusion or overlap. Policies should also include whether family members can be employees of the office.

6. ESTABLISH A TECHNOLOGY ROADMAP

A thoughtful technology roadmap supports the operations, security and reporting needs of a family office. This includes systems for accounting, performance reporting, document management and secure communication.

Exiting the Family Office

Exiting a family office is a significant decision often triggered by changes in family circumstances, shifting priorities or generational transitions. Sometimes, by the third or fourth generation, families may no longer share a strong sense of identity or common purpose, which can diminish the need for the family office. In other cases, financial needs or lifestyle changes may prompt a reassessment. When considering exit strategies, families should conduct a comprehensive review of the office’s functions and costs. Many gradually wind down operations by outsourcing key services or integrating them into external wealth management providers. This allows for a smoother transition and continuity.

BNY Wealth Global Family Office Can Help

For more than two centuries, we’ve helped families build, manage and preserve wealth through initial liquidity events, family office creation and generational transitions. Backed by BNY, our Global Family Office Group delivers tailored solutions to help navigate the complexities of exceptional wealth.