Starting or creating a family office
What Happens to the Office Structure When the Wealth Creator Dies or Becomes Incapacitated?
Short answer. The office should follow a written continuity plan that names who can make decisions, how authority transfers, and which responsibilities continue. Agree on the plan while the wealth creator can participate and coordinate it with the family's legal documents. Make sure staff and advisers know whom to contact.
When the wealth creator dies or becomes incapacitated, the office should follow a continuity plan agreed on by the family in advance. The plan needs to identify who can act and which decisions they can make. It should also explain how the office will keep essential work moving.
Document Authority and Succession
Set out who may make decisions if the wealth creator cannot. Distinguish day-to-day approvals from major matters such as investment policy, hiring the office leader, or changing the office's purpose. Name an interim contact for staff and advisers. Explain how the family will choose a longer-term decision-maker or governing group.
Coordinate the office plan with the family's estate documents, trust documents, and entity documents. The office should not rely on assumptions about who has authority. Talk with your attorney and CPA about the legal and tax specifics. Check that written procedures work with the formal documents.
Preserve Knowledge and Access
Important relationships should not exist only in the wealth creator's memory. Keep records and routines documented as well. Maintain current contact lists and account records, along with entity records and key contracts. Keep a clear calendar of recurring responsibilities. Limit sensitive information to those who need it, while ensuring the people named in the continuity plan can access what they need to act.
Assign responsibility for financial reporting, payments, adviser coordination, and other recurring work. Keep procedures current and provide a practical backup if the office leader is unavailable. The operational processes guide can help identify tasks that need documented ownership.
Prepare the Family and Team
Discuss the plan with family members who may take on authority. They should understand the wealth creator's intentions and the office's current commitments. They also need to know the limits of their roles. Staff need to know where instructions come from and how to handle conflicting requests. A family governance plan can provide a place to set those expectations.
Consider scenarios that could interrupt normal leadership and write step-by-step instructions for each. The plan does not need to settle every future family decision. It should give the office enough direction to continue essential operations and avoid rushed decisions during a difficult period.
Review the Plan Over Time
Revisit the continuity arrangements when family roles, office leadership, or entities change. Confirm that designated people still understand their responsibilities. Make sure staff know how to reach them. A plan the family discusses, documents, and maintains gives them a more orderly way to carry the office forward.
Read next: How can a family structure the office to serve several generations?
If you agree on what these scenarios are, write out a series of step-by-step instructions, and assign the power for someone to carry those out in case the situation ever arises.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.