- A family office manages the assets of wealthy families and offers individual financial and wealth management services.
- There are Single Family Offices (SFO) and Multi Family Offices (MFO), which serve different needs.
- The most common legal forms in Germany are GmbH, AG and foundations, chosen on the basis of tax considerations.
- Family offices must meet specific regulatory requirements, especially when providing services to third parties.
- Its services include asset management, tax planning, legal advice and philanthropic activities.
- The advantages are independent management, individual strategies and confidentiality of family financial matters.
- Challenges include complex regulatory requirements and the risk of internal family conflicts.
Definition and functioning of a family office A family office is a professional organization that specializes in the comprehensive management of wealthy families’ assets. These organizations offer individually tailored services ranging from financial planning and asset management to tax and legal advice, philanthropic activities and succession planning. Family offices pursue the primary goal of preserving and increasing family wealth in the long term and transferring it to future generations as effectively as possible. This can be either a single family office (SFO), which serves one family exclusively, or a multi-family office (MFO), which offers services for several families at the same time. Family offices offer the advantage of a holistic and independent approach that takes individual account of complex asset and family situations.
Legal forms and structural organization of family offices Family offices can take on different legal forms in Germany. They are often founded as a GmbH, GmbH & Co. KG, AG or as foundations. The choice of legal form depends largely on tax and liability considerations. The GmbH in particular offers the advantage of limited liability and a clear separation of private assets and business assets. A foundation, on the other hand, is often used to secure family assets in the long term, to pursue charitable purposes or to structure the transfer of assets to subsequent generations in a tax-optimized manner. Structuring a family office always requires a comprehensive legal and tax analysis of the individual family circumstances.
Legal and regulatory requirements Although family offices initially function as private asset management companies, they are nevertheless subject to specific legal and regulatory framework conditions. In particular, if they provide financial services or asset management services for third parties, they may require a license under the German Banking Act (KWG) and be subject to supervision by the German Federal Financial Supervisory Authority (BaFin). It is also necessary to check whether activities are subject to licensing under the German Investment Code (KAGB), particularly if the family office launches or manages investment funds or alternative investments. This requires a precise analysis and ongoing compliance structures in order to avoid regulatory risks.
Typical services of a family office The services of a family office are comprehensive and highly individualized. Typically, the range of services includes asset management and investment advice, tax planning and optimization as well as legal advice in the area of inheritance and corporate law. In addition, many family offices offer support with real estate management, company investments and succession planning. In the area of philanthropy, family offices often coordinate the establishment and administration of foundations or the implementation of the family’s social commitments. The scope of services is always based on the specific needs and requirements of the family in question.
Advantages of a family office for wealthy families Setting up a family office offers numerous advantages. The centralized and independent management and control of family assets by qualified experts is particularly noteworthy. Family offices also offer individual and long-term strategy development that is tailored to the family’s personal goals and values. This enables efficient management, optimal tax structuring and conflict-free asset succession. Another key advantage is the confidentiality and discretion that family offices guarantee, ensuring the best possible protection of family affairs and financial data.
Challenges and risks for family offices Despite the many advantages, family offices also face challenges. In particular, the complex regulatory requirements represent a constant challenge that must be overcome through professional compliance management. There is also a risk of internal family conflicts over the management of assets or the direction of the family office, which requires careful internal governance structuring. In addition, family offices are exposed to an ongoing need for expertise, particularly in areas such as investment strategies, tax legislation and international asset structuring. These requirements necessitate careful selection of advisors and regular adaptation to changing legal and tax conditions.