FOXCloud: What’s on the Minds of FOX Members – September 2023

The following were the most talked about topics within the networks on FOXChat in September 2023:

 

Communications Regarding CTA

What communication are other family offices providing to family members and other required reporters under the Corporate Transparency Act? We have been waiting on additional guidance and forms to be available to confirm the process, particularly with respect to the FinCEN identifiers, but we plan to proceed soon since that guidance has not been released and the deadline is getting closer. (Source: FOPeer)

  • Just wanted to share this recent piece published in Bloomberg Tax on the impacts of the Corporate Transparency Act reporting requirements on Private Trust Companies.
  • We did an awareness update for our G2 personal advisors (attorneys) and offered to assist in obtaining FinCEN identifiers, noted that we would handle all filings for entities within the family office structure, including for FLPs and other ownership entities, and would be happy to assist for other entities outside the family office structure as a service. We used two very short slides that included the following:
    • WHAT: The Corporate Transparency Act ("CTA") was enacted by Congress on January 1, 2021, to protect the US financial system.
    • WHY: Requires disclosure of "corporate" ownership in an effort to prevent money laundering.
    • WHEN: Effective January 1, 2024.
      • Entities formed 1/1/24 or later must comply within 30 days of formation.
      • Entities existing prior to 1/1/24 have until 1/1/25 to comply.
    • WHO: Small corporations, LLCs, limited partnerships, statutory trusts, or "any other entity created in or registered to do business in the US" is required to disclose information regarding
      • The Reporting Company
      • Beneficial Owners
      • Company Applicants
    • Who is a Beneficial Owner?
      • Exercises Substantial Control (President, CFO, CEO, COO, GC, other officers performing similar functions, individuals appointed as "Managers" of an LLC, Members holding voting units)
      • Ownership Interest – Owns or controls 25% or more of a Reporting Company
      • Exempt: Minors and Heirs (holding only a future interest)
    • What Information must be Disclosed?
      • Full legal name
      • Date of birth
      • Residential address of Beneficial Owners
      • Unique ID # (U.S. passport, state or local government ID, driver's license)
      • Picture of the ID
      • ALTERNATIVE: Obtain FinCEN ID
    • Please note that this is not legal advice but should give you a place to start with your own advisors.

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Digital File Management

Need help with organizing our files in BOX as we move the files from the server. Does anyone have a template or know the best way to create a filing structure within the FO? (Source: FOPeer)

  • We use FileCenter for organization of folders/files/documents on our server and cloud accounts (OneDrive/ Drop Box/Google Drive). Very reasonably priced and easy to implement. We have used it for 10+ years. www.filecenter.com
  • Here's the general structure we have used for the FO:
    • Folders named by family member with their birthdate like this:
      • Samuel 1-21-52
      • Substructure: owner initials followed by content
      • SJQ Estate Documents
      • SJQ Flowcharts
      • SJQ Golf memberships
      • SJQ Insurance
      • SJQ Investments & Stocks
      • SJQ Life Insurance
      • SJQ LOA
      • SJQ Loans
      • SJQ Medicare-Social Security
      • SJQ Personal Financial Statements
      • SJQ Profit Sharing
      • SJQ Property
      • SJQ Vehicles and Boats

      I also include the wife and children under the "Samuel 1-21-52" substructure if they are not significant holders of assets with the same name and birthdate designation. This may or may not be helpful, but it seems to work for us at this time.
  • We have a flat management structure and a similarly flat file structure, largely maintained by me [G2] for the benefit of G3 et seq.
     
    There is a top-level folder for each family member [encompassing the G3 person and spouse/children] and there will be standard files for:
    • accounts, with sub-folders for each account
    • tax returns, with sub-folders for each year
    • insurance/health
    • insurance/home
    • car and insurance

    There is a similar structure for each LLC/property/business. I use a leading character to sort these folders to the top of the list. Then there will be folders unique to each person or entity, depending on their activities/needs.
     
    In January, I go back through the accumulated files for the year and roll the monthly account statements up into a single year pdf. The goal is always to file with the question—Where would I look for this first? And then try to put the file there.

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Equity Transfers

For those of you who have operating companies—Who does the actual equity transfers for your company? Currently, we use the core operating company resources to affect these transfers, which takes a lot of internal time. Has anyone outsourced this work or used a shared family office resource to do it? (Source: ADVPeer/FOPeer)

  • If we understand the ask correctly, our lead strategist and planning lead for Family Offices suggested that they would need more information and understand the facts a little better. Transferring equity in an operating business can raise numerous legal and operational issues. In some circumstances, it can be possible to use a family LLC as the owner of the interests in the company. In that case, the estate planning transfers can be completed at the family LLC level by the estate planning team. But coordination is always going to be necessary—for example there may be ownership covenants required by lenders. And there are many circumstances where a family LLC would be inappropriate. Fully "outsourcing" the equity transfers is probably not possible (or desirable). But there may be ways to be more efficient with the process. Happy to discuss more if we can help.

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G2 Advice

We would like to explore how other family office principals have brought G2 into the fold. Anyone willing to share your experience? (Source: FOPeer)

  • Due to the amount of interest in this topic, a member discussion has been scheduled for November 7 for FOPeer members.

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Health Benefits and Opt-Out

We are renewing our annual benefits and currently pay 80% of the health premiums for a high deductible health plan and offer a $100 per month opt out. We are considering offering an employer contribution to the employee health savings plan and increasing our opt-out pay. Are others 80/20? Do you provide opt out for those employees who choose to elect their spouse’s coverage? (Source: FOPeer)

  • We pay 75% of health premium for single and family, 100% dental, no opt-out payment.
  • We pay 100% of premiums for all family members using a platinum level health insurance plan, as well as dental and vision. There is no opt-out payment.
  • We pay 100% of medical, dental and vision for employees and their families, and the plan itself is generous. No payment for opting out (but everyone participates).
  • We pay 90% of premiums for family coverage on BCBS's top plan and 100% for dental for family and small life insurance policy. No opt-out payment.
  • For the employee, we currently pay 60% medical, 50% dental, almost 100% vision. Building on the other question, we would be interested in hearing what percentage of the employee health insurance most are paying as well.
  • Through our operating company we pay 66% of total premium for each level of coverage (EE, EE+SP, FAM) with no opt-out payment for spouse or kids. We pay a total of $1820 into the employee's Health Savings account annually, contributed each payroll period.

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High-End Private Residential General Contractor (GC)

I am seeking a recommendation for a high-end private residential general contractor (GC). Project sizes vary in size; however, some are above $150MM+. Ideally, this GC would be able to work in various places in the U.S. –however, some concentration in the New York and South Florida area would be beneficial. Ideally, this GC would have a relationship with the principal/founder of your FO. Quality matters.(Source: ADVPeer/FOPeer)

  • Bond Design does outstanding interior design work. They concentrate in the intermountain west (Park City, Big Sky, Vail, etc.) but do work nationally.
  • We frequently get these types of requests from our families and have an internal group at Maestro dedicated to managing them full time for anything from $5M renos to $100+M builds. They typically go through a few weeks discovery process to plan out the proper RFI/RFP process and ultimately become the primary contact with the GC and architects on behalf of the client.
     
    I'm happy to share some of the groups we use. We sought and have permission to share their contact info and are happy to make introductions to the owners/CEOs of each of them, some of whom also count themselves as clients (it’s a very small circle). Like all partners in our program, their profiles and the work they do are beyond reproach and discreet, but each specializes in a slightly different aesthetic, geography, technical skill set, etc.

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Liquidity Investment Policy

Given the current rate environment, our group has been tasked to create a liquidity investment policy that will provide a process for short-term cash investing (treasuries only) to produce yield. Has anyone written one of these yet and is willing to share? We are contacting our bankers to see if they have any general policies that can be our starting point. (Source: ADVPeer/FOPeer)

  • We have done this for a number of our clients and family offices recently. We would be happy to learn more about the approach here and suggest some best practices. Happy to share some templates as well if valuable. Feel free to reach out directly.

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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.)

AI Invoice Processing

We are looking for someone that has successfully implemented a solution for invoice processing, preferably AI. We have a mountain of invoices that come in each month, and we would like to eliminate manual work. (Source: FOPeer)

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Career Coach Chicago

Does anyone have recommendations on a career coach in the Chicago area? We have an early twenties family member who could use some coaching (fields to search in, interviewing skills, etc.) (Source: FOPeer)

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Chef Help Wanted

A busy individual in a formal household with no children on the East Coast is looking to hire an experienced Private Chef. This position is daily from late November through April, and the end of June through August. Room and board and travel expenses are covered by employer. (Source: FOPeer)

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Deductibility of Legal Fees for Scholarship Fund

A family member engaged a law firm personally to help establish a fund to provide scholarships at a university. Does anyone know if the legal fees are deductible as a charitable contribution on the family member's 1040? (Source: FOPeer)

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Household Staffing Concierge Services

We're looking for recommendations on potential staffing providers that can support the NYC/Tri-State area and Greater Miami. Looking for a staffing provider that does White-Glove/Concierge level support—effectively covering a range of roles (nannies, housekeepers, chefs, tutors); and that the agency has the capacity to manage them on their own payroll ahead of any hiring decisions. Our goal is to provide our principals with a one-stop shop that can support household staffing needs quickly. (Source: FOPeer/HCAP)

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Inventory Management Technology

We have an operating business that is in need of a new inventory management technology. Can anyone make a recommendation? (Source: TODS)

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Marketing/Branding Consultant

We are looking for potential referrals from anyone who has had a good experience working with an outside consultant to undertake a marketing/branding refresh for their multi-family office/ultra-affluent practice. Project scope includes updates to website, social media, pitch book/deck, etc. (Source: ADVPeer)

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Outside Independent Director

Does anyone have an example of this we can see? (Source: FOPeer/HCAP)

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Post-Quantum Cryptography

Wondering if anyone has considered post-quantum cryptography concerns? That is, if/when this becomes a real thing, what does that mean for encrypted content. I'm pretty sure in the early 2000s, experts said "anytime now, possibly in the next 5-10 years." We're at the end of 2023 now and while there's no urgency like we faced with the Y2K bug, this post-quantum thing has been getting more press coverage recently.

Most everything is with other parties/counterparties, and any tech we use in-house is off-the-shelf so it's not like I can influence a vendor to change the way they encrypt disks/data or tell a firewall manufacturer to consider changing how VPNs are established. But I'm assuming that there are things we can do today, to prep for "tomorrow."

For now, we look to get educated, identify all places where cryptography is used, etc. But beyond these steps, are there things you guys are doing? Is this a concern for others? If so, have you engaged anyone to assist? (Source: TODS)

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Residential Property Management

Our client is looking for a company that can help them manage the multitude of residential properties that the family owns. They need full life cycle management—from identification, purchase, maintenance and upkeep to disposition/sale. Note that they are looking for a company that specializes in residential space/vacation homes vs. commercial property management. Please let me know if you have a referral you can make. (Source: ADVPeer)

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RIA/ERA Compliance Consultants

Any referrals for RIA/ERA compliance consultants would be greatly appreciated. (Source: FOPeer)

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Sudden Idiopathic Sensorineural Hearing Loss

We have a family member who was recently diagnosed with Sudden Idiopathic Sensorineural Hearing Loss. The solution made by their local doctor did not correct the issue, and we are now looking to find an outstanding doctor who specializes in this in the West Coast or Midwest. Any recommendations or referrals would be greatly appreciated! (Source: FOPeer)

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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.

Florida Divorce Attorney

Can anyone recommend a good divorce attorney who practices in the State of Florida? (Source: ADVPeer)

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Healthcare Consultant for New York Marketplace

Seeking a health care consultant referral to help a family navigate the New York marketplace to secure a health care plan. (Source: ADVPeer)

  • We have worked with John Samuels at Better Health Advisors. He and his team of experts provide a wide range of healthcare advice and solutions. www.betterhealthadvisors.com

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IT Specialist

We are looking for someone that can assist with our Internet of Things needs across multiple residences. Ideally someone that has experience in home automation, apple products, Creston, Control4, etc. (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.

Expense Management Software

We have been using Emburse Certify as our expense management software for a few years now and have been having issues with them recently. Wondering if anyone has recommendations for expense management solutions that work well with automatic expense uploading, integration with 3rd party sources (Uber, Lyft, Venmo, etc.), and otherwise just smooth functionality on the backend. (Source: FOPeer)

  • Did you look at Airbase or any other similar products before choosing Ramp? We are looking into Ramp and it looks to be a really great solution. We are also wondering if you are setting up multiple entities/individuals as subsidiaries or creating new accounts for each?
  • We looked at Airbase and really liked it but ruled it out because it was not able to sync to 'user-defined' dimensions in Sage Intacct. Airbase may have updated that by now, but Ramp was able to do it from the start so in our world, Ramp > Airbase. We have multiple entities sharing one instance of Ramp. Each entity is mapped to its own checking account at the end of the month. Ramp calculates how much was spent by each entity and debits each account.
  • We are moving away from Airbase and toward Ramp. Airbase's customer support and their Sage Intacct integration are lacking. We've been very impressed with Ramp so far.
  • We use Dext (formerly receipt bank). Several of our teammates work for multiple entities so they have more than one corporate card. Dext provides a user-friendly interface where we can all use the mobile app. It integrates with Quickbooks online, so the workflow is the user uses card, snaps a photo or emails receipt into the corresponding Dext account, then our bookkeeper can take a look at how it is categorized before publishing it to Quickbooks online. I am director of the office and using it myself is great. Dext uses OCR like most expense management software, and it seems to work very well. If used correctly, it saves our teams a ton of time and gives us a simple way to review expenses. In one place, we see the charge, the receipt and the employee's note about the receipt.
     
    ...but we have a problem. We are moving from Quickbooks to Sage Intaact. We have heard conflicting reports about Dext and Sage Intaact. Apparently, it works very well with Sage, but we haven’t heard anything about Sage Intaact.
     
    Anyone here using both? Would be great to stick with the same expense management system to avoid retraining everyone on that while changing ERPs.

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Legal Entity and Compliance Solution

Hello, has anyone used "Diligent Entities" to manage their legal entities documents and holdings structure? How is it compared to ORCA? Any feedback around both solutions will be welcome. We are evaluating ORCA at the moment, but Diligent Entities was also brought to our attention. (Source: FOPeer)

  • We are looking for a contact at ORCA—Does anyone have a contact who they would recommend?
  • You can contact Charmaine Tang at charmaine@withorca.com. Contact information below and feel free to let her know you got your contact information from me.

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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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