Expert Tips and Strategies for Setting Up a Successful Family Office With a Blended Family

Many ultra-high-net-worth families rely on a family office and family law practice to help manage their finances, investments, long-term planning and charitable giving. These services are even more helpful to blended families who may come from different backgrounds, with different assets and different financial histories.

To discuss best practices for establishing a blended family office as it “expands and contracts over a lifetime,” Make It Better Media hosted a virtual fireside chat on March 9. The discussion was paneled by Janet Boyle, Founder and Principal at Family Law Solutions, P.C., and Andrew Keyt, Founder & CEO at Generation 6 Family Enterprise Advisors. The event was moderated by Sharon Krone, Executive Director of the Make It Better Foundation.

Connection, Cohesion, Clarity and Communication

Krone began the discussion with a quote from Keyt, “To create family cohesion and a sense of emotional ownership, a family must wrestle with what they see as the purpose of their wealth.” 

When families primarily focus on financial capital, “the family develops a sense of being a client of the family office rather than being the owners of the family office,” Keyt said in response. “It puts the family into a really passive mentality … rather than a sense of ownership and responsibility.”

Other forms of capital — like intellectual or relational — can be deployed through philanthropy or social impact investing. Diversifying these operations leads to benefits “beyond just producing better financial results,” Keyt added. “Financial results are necessary for a business to live, but not a reason to live.”

By establishing family-wide connection, cohesion and commitment to a common sense of purpose, outside of a financial endpoint, family members can go forward confidently to accomplish their goals together. Boyle suggests that families — especially blended families — do not hesitate to square things away in the event of a sudden change, like a new marriage or untimely passing.

“We do what we need to do and the rest of the time we have the tendency to procrastinate,” Boyle said. “The procrastination can ultimately cause really difficult problems.”

As an example, Boyle discussed a prenuptial agreement — which is commonly expected to be a ”defensive” move, rather than an “invitation” to be a cohesive unit. A prenup — like many other elements of the family office — should be a living document that is adjusted as “the couple grows together” or where assets are accrued, stock changes hands, businesses expand or when retirements occur, Boyle said. While keeping the prenup up to date eases legal proceedings, more importantly, it opens avenues of communication and engagement within the family to keep their assets better protected. It’s these transparent conversations that can aid blended families especially, since they are merging two different “systems” together.

Sustaining Family Enterprises Across Time

While many families may be tempted to focus strictly on structure, Keyt says the relational aspect is just as important. This is why understanding the family’s value system and how it impacts individuals within the family is just as important as setting formal goals.

Regularly setting aside time to have pointed conversations about complicated, sometimes emotional, topics can spare the family grief down the road. And for blended families who, for example, may see their parents or relatives enter into a marriage with no prenup or safety net, Boyle recommends visiting a trusted family advisor. By incorporating advice and clarity from advisors, family law and the family office, concerned parties can overcome potentially threatening situations — since “we do not have all the answers ourselves,” as Keyt reminded us.

On that note, planning for how to prepare the next generation of wealth inheritors is both necessary and a kindness.

Keyt’s tips for navigating this process:

  1. Educate yourself — Ask, “How do I experience wealth? What are my emotions around wealth? How do I plan to talk to my kids about wealth?”
  2. Engage at an age appropriate level — Start early with concepts like budgeting or saving, and, as they age, progressively add new lessons on the responsibility of wealth.
  3. Be a parent — In real time, coach the next generation to be accountable, motivated and know how to build the muscle around self-reliance, instead of being dependent on wealth.
  4. Talk about values — Again, to avoid future disagreements over where wealth is directed, establish family values that will last a lifetime.

As Keyt said, and the panel agreed, “A family that cultivates purpose and meaning for their wealth are the ones who traditionally sustain themselves across time.”

Watch the full discussion below:

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Margaret Smith is a Chicago-based writer and editor with a passion for socio-political storytelling about their community. They are a graduate of Columbia College Chicago.

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