How Should a Family Decide Who Pays for Services Used by Individual Relatives?

Decide who pays by defining the boundary between shared office responsibilities and services provided to an individual relative. Put the rule in writing before the office handles personal requests. That gives relatives and staff a common way to understand what the family pays collectively and what may be charged to the person receiving a distinct service.

Start with a service list. For each item, describe who benefits, whether the work is part of the office's core mandate, and how the cost will be tracked. Shared reporting, family governance, and office administration may be handled under a common budget. A discrete project or personal service may be assigned to one relative if the policy says so and the work can be identified.

Make the Cost Rule Clear Before Work Begins

When a relative requests a service, confirm its scope, expected provider or staff time, approval path, and payment treatment. The office should not leave staff to decide case by case without guidance. If a request contains both shared and individual work, explain how the office will separate the tasks or allocate the charge.

Outside providers can make it easier to identify costs tied to a particular request, but the office still needs to coordinate and review their work. Richard's The Single Family Office notes that service providers bring added coordination responsibilities and costs. Maintain a record of the engagement, invoice, approval, and the person or family function to which the expense is assigned.

Use a Consistent Process for Exceptions

Sometimes a request may benefit more than one person, or the distinction between individual and shared service may not be clear. Set out who can decide such cases and how the decision will be recorded. Apply the same reasoning to comparable requests across relatives. If the policy changes, communicate the change and the date it takes effect.

Clear reporting helps prevent surprise. Give relatives a periodic statement of shared costs and individual charges, with enough explanation to connect each amount to a service. Keep supporting records so the office can answer questions without relying on memory. The operational processes guide can help define how requests, invoices, and reimbursements move through the office.

Have the Right Advisers Review Specifics

Who pays may affect accounting, entity arrangements, or tax treatment, depending on the family's circumstances. Talk with your attorney or CPA before adopting a policy with legal or tax implications. The office should follow the resulting guidance, maintain consistent records, and make sure each relative understands the payment rule before service begins.

For broader shared costs, connect the policy to the family's governance process. The governance guide can help identify who sets spending rules and resolves disagreements. A written, repeatable process lets the family support individual needs while keeping office expenses visible.

Read next: How should a family handle costs when some relatives use the office more than others?

Any new vendor or service provider brings along new responsibilities for coordinating between parties and, of course, new costs that will ultimately show up in the bottom line.

Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.