One of the truthists that everyone actually heard is that the rich are enriched. why? Well, in modern times, there is an answer that families with big fortune can use organization of family office. So what is a family office? It consists of real estate planning attorneys, tax accountant attorneys, CPA, financial planners, investment advisory companies, life insurance agents, property insurance brokers, and ultimately family office administrators.
So what is a big deal? With the exception of family office administrators, are most people with reasonable assets and income not hiring all these experts? not really. "When did I compile a real estate plan lawyer, tax accountant, CPA, financial planner, investment advisor, life insurance agent, property insurance broker all in the same room and formulated a comprehensive plan for me? "The answer of most people is never"! In fact, for most people, these experts have never talked to each other, and in most cases they do not know each other's name.
Why is this so important? Why is it important for you and your family to regularly gather these experts? There are hundreds of questions that require answers every year. Here are several:
1. Have you changed your will and trust since the birth, death, divorce of a child?
Probably not. Your lawyer does not know the change and is busy.
2. Did your life insurance agency establish the most cost-effective insurance available on the market this year, or simply used a company he has a contract with?
Perhaps he is interested in selling and maintaining policies with the current company and can not find the lowest cost among 1600 life insurance companies.
3. Does your CPA conduct a cost-benefit analysis on your life insurance contract?
Probably not. In the series of calls made at the research in this article, we could not find any CPA who received such a request.
4. Are your property and casualty insurance re-estimated annually to minimize the cost of premiums for your car, family, business, and everything else? Did you analyze these coverage to ensure that the scope of responsibility is sufficient to trigger the scope of your umbrella?
Probably not. In fact, I could not find a single person who has ever done this!
5. Have you asked investment counsel's feet to justify your investment choice based on the best returns gained worldwide with the same investment class?
Probably not. Indeed, one of the top two or three managers in the portfolio could not find an investment advisor who could name the same as what he was using for his client.
6. Does the CPA actually allocate time to provide serious tax advice every year, simply decide the minimum tax return after 12/31 after preparing the tax return? Financial structure?
Probably the latter.
You probably can ask yourself hundreds of questions like these and you will not doubt the same answer. This analysis is not actually done. But through this exercise, this is very important, but I am sure that I do not know where to start from. I could not imagine putting all of these people in the conference room. Also, I could not imagine coordinating the all-day meeting where the adviser saw justifying your team's decisions to each other's members on your behalf. Even if you schedule such a meeting, these experts are trying to scrutinize their actions, especially of other members, when analyzing the activities you recommend!
So, why does not anyone do this? Because the main members of the team are missing They are losing family office administrators - experts to undertake the responsibility to organize this annual comprehensive review. Very wealthy people usually have this expert on staff. But regular periodic billionaires, doctors, entrepreneurs, and business owners do not know where to turn. They can not justify the cost of sophisticated professional managers and can not perform this task even if they can not find experienced people.
What can they do? They can hold family office management company. A business company that provides this service to hundreds of clients on a shared cost basis.
1. One company engages in comprehensive data collection: to build a portfolio of all will, trust, business contracts, foundation documents, insurance contracts and investments, along with detailed personal and corporate financial statements.
2. The portfolio will be forwarded to the company's planning department where the CPA and the attorney review everything and create a list of issues that need to be addressed.
3. The conference call is scheduled with each adviser. Client attorneys, CPA, etc. contain explanations on the structure of the new family office under the direction of the company. After that, discussions will be held on issues raised by the Planning Department.
4. Over several weeks or months, a series of comprehensive changes are made and all-day meetings are scheduled between the client and all advisors. A newly proposed plan will be presented and the client will make a decision on that day. There is never a problem of "I would like to consult with lawyers, CPAs, agents, brokers, etc.". All of these people are sitting in front of him.
5. The company's customer service department takes over and oversees all changes and additional implementations agreed.
For clients who have extensive activities and many activities, making this procedure very efficient is an annual event, perhaps even half a year. And it allows the client to accept the team of high-end experts at cost.
Once a family office is set up, another very important consideration is that most CPAs are simply tax filers, and only basic planning techniques are incorporated. Companies have adopted IRS compliant highly sophisticated taxation strategies that have been used for decades by wealthy families, their advisors and major US companies, making them available to the general public. They teach about these strategies in collaboration with client CPA and investors. A typical plan includes the following objectives:
• Placing assets in the most effective asset protection vehicles
• Provide a tax efficient environment where most investments can enjoy low tax rates such as real estate, securities, closely held stocks, and sometimes no taxes.
• Provide business owners the ability to reduce corporate tax using the Fortune 500 type strategy.
• Increase net assets and retireable funds through compliance tax planning and minimize taxes when these funds are withdrawn.
Whether you hire professional family office managers or work yourself, it is imperative that all experts, businessmen, and people with reasonable wealth carry out this annual exercise. Implementing the above advanced tax planning strategy and reducing various tax burdens related to pre-tax profit and post-tax investment will literally change when you live and retire. Probably there is no important planning work you can do.
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