What Approval Limits Should a New Family Office Put in Place?

A new family office should set approval limits in writing before staff begin moving money or committing family capital. Limits clarify which decisions can be handled routinely and which require added review from family leadership or a committee.

Cover the Main Decision Types

Begin with a list of actions the office may take: paying invoices, reimbursing relatives, making charitable gifts, approving compensation, changing investment allocations, committing capital, borrowing, opening accounts, and changing account signatories. For each action, identify who may recommend it, who approves it, and who executes it. The required approval can differ by decision type. For example, a routine office expense may follow a simpler path than a new investment or a change to investment policy.

Set limits that reflect the family's own circumstances and operating arrangements. A payment threshold can trigger a second signer, while an investment threshold can trigger investment committee or board review. Approval can also depend on whether the decision fits an agreed policy, creates a conflict, or affects more than one family branch. The governance guide outlines areas where families commonly establish rules.

Protect Transfers and Commitments

Do not give one employee unchecked ability to withdraw large sums or approve and release a transfer alone. Use separate roles for requesting, approving, and executing payments where practical. Bank permissions, dual signatures, and written authorization records can support this separation even in a small operation. The source material gives examples of dual-signature processes above a set amount, such as $5,000 or $10,000. A family can use those examples as prompts for discussion, then set limits that fit its own needs.

For investment decisions, the written policy should say what due diligence is expected, who reviews it, who makes the final decision, and how conflicts are disclosed. The family should also specify who can change the investment policy and how that change is approved. Keep the approval record with the decision file, including the rationale and the information reviewers considered.

Review Limits as the Office Changes

Approval limits should be easy for staff and family members to find. Record the current version, the people authorized under it, and when the family adopted it. Establish a process for exceptions, including who can authorize an urgent action and how it is documented afterward. Review the policy when responsibilities, family participation, or the office's operating structure changes.

In my experience, the value of a limit is that it removes guesswork. People can act within their authority and know when they need to pause for approval. For practical guidance on payments and controls, see segregated duties and procedures and investment committees and advisory boards. Use the family office cost calculator to consider operating costs when planning staff and review capacity. Talk with your attorney or CPA about legal and tax requirements that may apply to the office or its entities.

Typically, no single employee, whether they are a family member or not, should have the ability to withdraw large sums of money from the business, and if someone is allowed that privilege, it should only be after receiving approval for that movement of funds.

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