FOXCloud: What’s on the Minds of FOX Members – July 2024

 

The following were the most talked about topics within the networks on FOXChat in July 2024:

Annual Exclusion Gifts

We are exploring options to hold annual exclusion gifts for our youngest generation, with the objective that there is no access to the entire value at age 18 (primarily for financial education/cultural reasons). We are considering Crummey trusts, although they seem to have a heavy administrative burden. Have you implemented any alternative arrangements that would meet this objective and have a lesser administrative burden? (Source: FOPeer)

  • A regular grantor trust works well for my daughter, now aged 22 and initiated when she was a year old.
  • Using a regular grantor trust works fine. You can have one where there's a limited window at 18 or 21 for the beneficiary to terminate or withdraw the funds, but if not used, the trust becomes irrevocable until a later date. It would still be a grantor trust because of the withdrawal rights.
     
    If you had more than one beneficiary to whom exclusion gifts were being made, the gifts could also be made by contributing the cash to an LLC which each of the children have membership interests in. Those membership interests would, ideally, be held in grantor trusts, but could just be held UGMA/UTMA or, even individually in the child's name. The manager of the LLC (not the children) would control the cash and investments, and the LLC agreement could control when membership interests could be redeemed or if disproportionate distributions were to be made. There would need to be an annual partnership tax return for the LLC, but if the funds are invested in marketable securities and/or cash deposits, the return would be relatively simple.

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Foundation Asset

I have a client that has a home that has been in the family foundation since the 1960s. The other asset is a portfolio of a liquid investment account. Based on the size of the home, and if public, it would be rented out for $850 a night. Given the rule to have the rentable time allocated to another 501 3c, for 95% of the time it is suggested the rent be lowered. It has been suggested to lower it significantly. If we do this, it will be difficult to cover expenses. Has anyone had experience with this? Can you direct me to someone who can help?

The other is the asset was recently valued and shows that it doubled. Given this, the allocation of the assets is, 50% of the value is coming from the house and the other 50% is in the liquid portfolio. This most recent change is now posing an issue with the distribution amounts that will deplete the liquid portfolio in about 10 years if all stays as it is today. (Source: ADVPeer)

  • Is the house being used by the donor? When you say 95% of it is used by a 501(c)(3) public charity, who is using it the other 5%?
  • How they are now setting it up is as follows. For the summer season it must be used by a 501c (95%). The rest of the season (in South Dakota) they were told they could have family use it (5%). Thoughts?

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Irrevocable Trust Sale of Tax Credits

Was curious if anyone has an opinion here. We have both an Non-Grantor Irrevocable Trust, and a Living Revocable Trust. The Revocable Trust was awarded state income tax credits (Ohio) and has less of a need for such credits than that of the Irrevocable Trust. We know that under Ohio Law, income tax credits are transferable, as sellable. My question is, would the sale of tax credits by the Revocable Trust to the Irrevocable Trust trigger any estate tax problems? The settlor of the Irrevocable Trust is also the Trustee of the Revocable Trust. (Source: FOPeer)

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Rising Gen Internship Program

We are looking to implement an internship program for Rising Gen. We are actively engaged in operating businesses and need a way to get them involved in various aspects so we can train appropriately. Has anyone prepared any high-level outlines/presentations relating to what these internship programs should look like/what departments are most valuable for interns to spend time in/length of the program/etc.? We want to ensure that we have a worthwhile program and not one where the next gen spends a couple weeks at an operator without real learning happening. (Source: FLN)

  • Rising Gen rotational programs can be useful to develop as you think about how best to support a robust understanding of an operating company. Of course, the alternative is a deep experience in one department. There are benefits and tradeoffs to both. From my perspective, you are thinking about the right set of questions as you consider developing such a program— length of time of the program and in each role, learning objectives for each experience/department, trajectory and sequence of experiences over time, special projects or initiatives to advance both at the department level and across experiences. I would recommend sketching out the key areas first and then getting department area supervisor feedback on the experiences.

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Member Referrals Requested:

This section includes service providers that members have recommended and/or are looking to hear about other members’ experiences.

Armanino

I would be interested in speaking with anyone who has worked with Armanino for either an Sage Intacct implementation or outsourced accounting services. (Source: FOPeer)

  • We recently worked with Armanino for a Sage Intacct implementation and were very happy with the results. Please feel free to connect if you would like to discuss.

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Estate Planning Attorney Ft. Walton/Destin

Seeking recommendations for an estate planning attorney that's located near Ft. Walton/Destin for our client that's selling their business. (Source: ADVPeer)

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Family Newsletter

Our family office wants to begin a recurring family newsletter. I would appreciate any examples or suggestions. (Source: FOPeer)

  • I’d be interested in seeing examples as well. We just issued our first quarterly newsletter earlier this month and have it organized into the following sections:
    • Family Council Quarterly Update
    • Story Corner — One of the older generations shares a story, favorite family recipe, etc.
    • Calendar — Events the family should be aware of (Includes family as well as select operating company events).
    • Philanthropy — Pictures and captions from philanthropy events (family philanthropy as well as operating company philanthropy events).
    • Family Updates — Pictures and captions of key family events that have happened (kids graduating, vacation pictures, birthday pics, etc.)
  • We have sent out a family newsletter three times a year since 2005-ish. Happy to walk anyone through the content journeys we've gone through over the years and where we are today.

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Family Office Intranet Uses

We're considering an Intranet for our family office and principals. We're interested in improving communication, efficiency, and knowledge sharing.

Has anyone successfully implemented a similar system? What features were most beneficial? What challenges did you face? Any particular service or platform that you would suggest? I would love to connect to hear more about your experiences.(Source: FOPeer)

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Home Health Aide Search Firm

Our Chicago-based client is looking for a home health aide to provide assistance in daily living and personal care services in patients’ homes in accordance with an established care plan. Responsibilities would include, among other things, health care services at the client's residence, certain domestic and household tasks, assistance with medication and personal care activities. Referrals, for either a relevant candidate or a search firm with expertise in this area, would be appreciated. (Source: HCAP)

  • Over the last few years, we have successfully used Halina Schimscheiner's agency for caregivers for three family members in Chicago. She is experienced at placing caregivers with high-net-worth clients, and we would recommend her. Here is Halina's contact information, please let me know if you would like to discuss:

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Outplacement Firms

I have a client who is looking for outplacement firm recommendations, ideally a firm that understands the family office space and works with family office execs. Have any of you used a firm that you would recommend? (Source: ADVPeer & HCAP)

  • Linda Mack at Mack International is great.

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Private Health Recommendations

I am wondering if any families know of private health networks with a strong connection to mental health and psychological experts that could see a member of our family concerning PTSD and anger.(Source: FOPeer)

  • FOX member, Yellowbrick, works with young adults struggling with mental health issues, including PTSD. You can contact Dr. Jesse Viner at jviner@yellowbrickprogram.com
  • Arden O'Connor/O'Connor Professional Group is another option: oconnorpg.com

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Profits Interest Only Percentage

For those offices who use the profits-interest only model, do you ever change the percentage of the profits the company receives? If so, how often do you change it? We're getting conflicting information on whether or not changing the percentage is allowed as part of the structure. (Source: FOPeer)

  • In the last 15 years we have changed it once and that was after getting a transfer pricing study from our accounting firm.
  • If your agreement allows for a change, you may change the percentage. However, it is something that should happen very rarely. We have had our profits interest structure for a number of years now; we've changed the percentage once.

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Additional Topics of Interest Seeking Peer Recommendations, Feedback, or Insights

(Your comments can be submitted as a reply to the message on FOXChat or emailed to networks@familyoffice.com for FOX to post and share anonymously on your behalf.)

Concierge Style IT Help

We are looking for an all-encompassing, Geek Squad person or service for both office and family personal IT services (such as setting up home wifi or a new printer) and also be available if a phone dies or an app stops working. Not on 24-hour call, but not just 9-5 either. It would be preferred if the person/service were willing to travel within the Northeast to get to everyone for at least an initial visit. Please let me know if you have any recommendations. (Source: FOPeer/TODS)

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Croatia Tax Advisors

Looking for good recommendations of tax advisors and law firms in Croatia. Appreciate any and all responses. (Source: FOPeer)

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Employment Attorney, Orange County

Seeking recommendations for an Orange County employment attorney for a client who is the CEO of a tech company owned by a PE firm, looking to renegotiate their terms. (Source: ADVPeer)

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Maryland Divorce Attorney

Family member requires divorce attorney in Gaithersburg/Germantown area. Custody issues will dominate the matter. Any recommendations would be appreciated. (Source: FOPeer)

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PEO Recommendations

We are a 30-person family office in California interested in exploring PEO options. If you currently work with a PEO and are happy with their product and service, I would appreciate knowing who you are working with and possibly an introduction. (Source: HCAP)

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Philadelphia Housekeeping Agency

Looking for good recommendations for an agency that places housekeepers in the Philadelphia suburban area. Appreciate any and all responses. (Source: FOPeer)

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Seattle CPA Firm

We have a client that owns a small business in Seattle. They would like to engage an accounting team for bookkeeping, tax, and possibly payroll services. We appreciate any referrals.(Source: FOPeer)

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Software Consultant

Does anyone have any experience with Deviate Consulting for software requirements identification and software selection? Looking for positives, negatives, lessons learned, etc. If you have and would be willing to share, please respond to me on this post or directly. (Source: FOPeer)

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Third-Party/Consultant Recommendations

We are seeking third-party firm/consultant recommendations for those familiar with setting up an internship program in the British Virgin Islands. The internship program will be on a private resort island and include entry-level hospitality positions. Any leads or recommendations are appreciated. (Source: FOPeer)

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Trust Company Custodian

We have used a California-based trust company for many years as our custodian. We are now evaluating other potential custodians, including trust companies and traditional providers. Any recommendations for a great trust company or solution here would be welcome and appreciated.

We selected our current trust company because they are able to handle a wide variety of account types (trusts, traditional taxable as well as IRA/Roth IRA/MPPP) and because they can custody both public securities as well as private company holdings and positions in VC/PE/Hedge funds, which some of the large banks (JP Morgan) and traditional custodians (Fidelity and Charles Schwab) told us they do not support within retirement accounts and within certain trusts.

Specifically, if you have substantial experience with custodians who are great with very large retirement accounts that hold private assets I would love to connect. (Source: FOPeer)

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Software Reviews/Experiences

This section contains software platforms that members have recommended and/or are looking to hear about other members’ experiences.

Ledgex

We are taking a serious look at Ledgex for use as our G/L software and are in the due diligence phase. We are interested in speaking with other family offices currently using the G/L accounting functions of Ledgex. Feel free to reach out to me directly. (Source: FOPeer)

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SharePoint and Azure Virtual Desktop

Does anyone have experience with:

  • SharePoint as a file server – do you run applications from the SharePoint file share? Is it straightforward to set up and administer? Is it secure? Would you use SharePoint for file sharing again?
  • Azure Virtual Desktop – Is anyone using AVD? Is anyone running third party applications using AVD? Are you going multi-server or individual desktops? How do you connect to your AVD instance?

Is anyone using Azure Virtual Desktop with SharePoint File services? (Source: TODS)

  • We use M365 with SharePoint/Teams and are working on transitioning our traditional files to SharePoint/Teams. We have also been using AVD for the last 4 years. I'd be happy to discuss our experience.
  • Our office uses Azure for our tax software, but we are not using the AVD technology. We are just hosting a single server that we run RDP into. We use SharePoint as our back end 'file server' and use OneDrive to access/manage day-to-day access. I don't think I could explain what most of that means, but we have very few complaints with either Azure or SharePoint/OneDrive. Our IT consultants, Synapse Networks, have worked closely with us regarding implementation and maintenance and would be able to discuss and possibly help with transition if needed: Kristine Marciniak kristine@synapse.tech.

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Secret Server Password Management App

Has anyone used the password management app Secret Server? Would like to hear the pros and cons of your experience if you have. (Source: FOPeer)

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Key to Network Acronyms

  • ADVPeer: Advisor Peer Community
  • FOPeer: Family Office Peer Community
  • DIN: Direct Investing Network
  • FLN: Family Learning Network
  • HCAP: Human Capital Network
  • LCN: Legal Counsel Network
  • PTC: Private Trust Company Network
  • RGN: Rising Gen Network
  • TODS: Technology Operations & Data Security Network

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