Starting or creating a family office
How Should the Office Handle Payments Requested by Family Members?
Short answer. Route each request through a documented process that records its purpose, supporting records, budget or policy basis, and required approver. Where possible, assign approval and payment execution to different people. Apply the same rules to relatives and record exceptions. Charitable gifts, loans, and family support may need added review and advice from the family's CPA or attorney.
A family office should process payment requests through documented steps that record the purpose, supporting records, approval, and payment. Consistent handling helps staff serve relatives fairly and prevents family funds from being released on informal instructions alone.
Use One Intake and Review Process
Ask the requesting family member to submit the amount, recipient, purpose, timing, plus any invoice or other supporting record. Staff can check whether the request fits an approved budget, family policy, or prior authorization. If it does not, send it to the person or group named in the approval framework. Keep the request and decision together in the office's records.
Set different rules for different requests. An office expense, personal reimbursement, family loan, charitable gift, or investment commitment may each follow distinct rules. The family should define those categories in advance, including who may request support and who has authority to approve it. The family compass guide can help families establish shared purpose and expectations before setting detailed policies.
Separate Approval From Payment
Where practical, assign approval and payment release to different people for large payments. The person processing a wire or check should confirm that the required approval is recorded and that the recipient and amount match the authorization. Dual signatures or a second-person review can provide a useful check. Set a threshold for added review based on the family's own arrangements, and apply it consistently.
Charitable gifts also need a clear process. Record the intended recipient, amount, purpose, plus approval. If a foundation or other entity is involved, ask your CPA or attorney about relevant tax and legal requirements. A family member's request should follow the same process even when urgent or familiar. If an exception is justified, record who approved it and why.
Be Consistent and Transparent
Apply the same rules to relatives in comparable situations. If the office allocates costs or services differently among family members, explain the policy and document the basis. Staff should know how to respond when a request falls outside their authority, including whom to contact and what information to collect. Do not make employees guess whether a request is a personal favor or an authorized office responsibility.
In my experience, clearly assigned roles help protect family relationships and the office team. Review the payment process with the people responsible for requests and approvals, as well as those handling transaction processing. For related operating controls, see family office operational processes, single family office governance, and partners, vendors and service providers. Talk with your CPA or attorney when a request raises tax, lending, or entity questions.
Areas to review include wire transfers, expense accounts, bonuses paid out, payments to contractors, and dual-signature wire transfer and check writing processes for anything over a set amount, such as $5,000 or $10,000.
Sources: How to Start a Family Office. Informational only, not financial, legal or tax advice.