Thought Leader Series

While folks residing on the coasts are keenly aware of the threats that hurricanes can pose in terms of water damage, most families are unaware that the main risk of water damage actually stems from within the home itself. We sat down with FOX member, Anne Martin, Senior Risk Management Specialist and Water Damage Mitigation Technical Specialist for AIG Private Client Group to get an understanding of why ultra high net worth homeowners, in particular, are so vulnerable when it comes to water damage and steps to take to prevent and mitigate the risks. FOX: Why is water damage such a proble...

An ounce of prevention is worth a pound of cure. -Benjamin FranklinYou’ve seen the news- wildfires are becoming a common occurrence. So much so that the term “megafire” is in the common vernacular. Wildfires used to spring up every few years in the Western U.S., but now they seem to be burning year-round. In fact, climatologists are predicting they will become even more frequent in the coming decades and possibly in locations we’d least suspect. So, what can we do to mitigate the risks to our families and property? We sat down with FOX member, Deserie Thigpen, Vice President and Head of Loss P...

In the midst of a growth economy, risk factors are sometimes pushed to the periphery of a company’s focus. It’s no different for family offices. When those risks eventually come crashing into the forefront, they’re often unexpected and can be costly. Incorporating risk planning into your short-term and long-term strategy can be extremely valuable.Recently at the FOX Family Office Forum, I discussed risk in my presentation, “A World of Increasing Risk – Are We Whistling in the Dark?” While many organizations are taking action, the realities of the risks may be greater than is commonly unde...

It’s natural to want to choose a family member or someone you know well to serve as your trustee. However, it sometimes also makes sense to choose a professional trustee like a bank or trust company as the trustee or co-trustee. The Pros of Using an Institution to Be Your TrusteeSelecting an institution to serve as your trustee may help you avoid some of the problems that can occur when a family member, friend or business associate is selected as a trustee, because institutional trustees:Have the skills and experience, along with the resources and systems, to effectively administer the tr...

Increasing demands for data and the up and coming younger generation are impacting the technology needs of family offices. Many family offices are challenged to meet the growing reporting needs of family and board members. The modern conveniences of the mobile digital age are impacting businesses everywhere, especially as the younger generation is becoming more engaged.Many family members are seeking different investment approaches that integrate personal values, sustainability, creativity and networked communities together with standard and alternative investment strategies. They also expect ...

In March, Warner attorneys Jon Kok and DeAndre' Harris presented a webinar for the FOX Human Capital Network. The topic was common mistakes that managers, including family office managers, can make that could leave the office or families open to employment liability.Employment mistakes have been big in the media lately, and family offices are also at risk for these mistakes, as their staff members often wear many hats for the office and are not always specifically trained on employment issues. Because the repercussions from employment mistakes can be damaging, we have posted the webinar t...

What a difference a year makes. Trade war predictions, Facebook data scandals, inflation concerns and Federal Reserve comments have been whipsawing markets in the first few months of 2018. As a testament to the increased turbulence, through mid-April we had already notched 28 trading days that resulted in a greater than 1% move from the previous S&P 500 close. Compare this to the 8 such instances seen in all of 2017, and the regime change becomes clear (see Exhibit #1). "We should be about half way through the volatility" Exhibit #1In the context of history, extended periods of v...

Two events in December 2017 presented new tax challenges for family offices and provide a reason to evaluate the structure of the office and the current classification of family office expenses. One is the US Tax Court’s decision in Lender Management v. Commissioner, TC Memo 2017-246 (“Lender”), and the other is the 2017 Tax Act (“Act”). Everyone is focusing on and planning for the provisions of the Act, but the Lender decision is also something you should pay attention to for your family office. The decision is important in that it provides a sort of “road-map” for family offices to foll...

Every wealth creation event has a story behind it, and it is in those stories we find the seeds that have germinated and blossomed into a family history and culture. The stories mean nothing, however, if they are lost in the mists of time. They must be preserved, revisited, and kept alive through family sharing if they are to inform successive generations.Storytelling itself is as old as human language. Even today, both ancient and modern cultures pass on knowledge through oral traditions. In the stories told from generation to generation, listeners learn and absorb the history, values, custom...

In December 2017, Congress passed the Tax Cuts and Jobs Act; a bold legislation designed to overhaul America’s tax code for the first time in 31 years. House Speaker Paul Ryan (R-WI) declared, “The Tax Cuts and Jobs Act is a game-changer for our country.” Taxpayers will see significant changes when they prepare their returns for 2018. Below, we've provided a helpful guide to understanding the impact of tax reform on individuals, itemized deductions, pass-through businesses, and corporations. Personal Income TaxesDeductionCurrent LawNew Conference BillStandard Deductions & Pe...

With all the media coverage in the last couple of months, you have certainly heard at least tidbits about the new Tax Cuts and Jobs Act (Act), signed by the president in December. One of the most important provisions of the Act for high net worth (HNW) families is the increased exemption amounts for estate, gift and generation-skipping transfer (GST) taxes. HNW Families Should Take Advantage of the Increased Tax Exemptions for Gifts Wealthy families should look at ways to take advantage of the significantly higher estate, gift and GST tax exemptions contained in the Act. In fact, if ...

Like many holidays, Valentine’s Day is a time when employees celebrate, while HR representatives, in-house counsel, and business owners hold their breath. In the #MeToo era, employers should consider proactively addressing workplace relationships and shoring up internal policies for dealing with complaints. Here are some tools to help employers get in the Valentine’s Day spirit.Addressing Budding RomancesWhat could be more romantic than giving a beau a “love contract” for Valentine’s Day? Even in the age of online dating, many Americans still meet their spouses at work and many more try. (Surp...

Whether establishing a new trust, modifying an existing trust or dealing with a transition of the incumbent trustee, selecting the person or institution who will act as your trustee is one of the most important decisions you and your family members will make. Many families want to keep everything “in the family,” and it is natural for them to consider using a close family member such as a parent, sibling or cousin for this important position. It is also natural to worry if this choice will come back to haunt you later. Check out the answers to common questions below to see if this choice ...

A Private Family Trust Company (“PFTC”) offers families the ability to have intergenerational governance over family assets, and provides a private forum for decision-making. However, if the PFTC does not have the proper operational model, it could become another headline story about family discord and mismanagement. Appropriate internal controls, fiduciary oversight and regulatory compliance protect the family from:Theft by a PFTC employeeInappropriate exercise of fiduciary oversight, resulting in claims by beneficiariesA negative audit by regulator or auditor, undermining family confidence i...

Is it ever worthwhile to accept concessionary investment returns?If your foundation’s aim is to achieve not just personal financial gain but also a specific positive social or environmental impact, the answer is a resounding yes. Foundations make program-related investments (PRI) to support charitable activities, with the potential return of capital within an established time frame. For example, one of the Bill and Melinda Gates Foundation’s many PRI is the Charter School Growth Fund, a low-interest loan reinvestment aimed to “provide high-performing and high-potential charter school operators...

When I was in third grade, my teacher brought in some maple tree saplings as part of a science lesson. We were shown two possible places to plant these saplings; one spot was in an old forest with many mature trees, and the other was in an open area with no other surrounding vegetation. Many of us choose the open area thinking the trees would get more nutrients by standing on their own; however, what I learned was that young trees grow better when planted around older trees. Young trees benefit from the pathways and protection created by older trees, allowing them the opportunity to develop a ...

I recently had an amazing opportunity to spend a few days with 46 millennial clients who came to Silicon Valley for our Next Generation Program. Focused on the theme “Innovate for Impact,” the program was hosted by our Family Wealth Advisors team and BNP Paribas Wealth Management.The 4-day event gave attendees, hailing from 18 different countries, an immersive experience in which they met with well-known tech entrepreneurs, evaluated startups as they pitched for venture capital, and toured the headquarters of Facebook and LinkedIn.The event also featured panel discussions and lively interactio...

“To thine own self be true,” William Shakespeare famously wrote. The same could be said of organizations, many of which tirelessly work to ensure that they uphold the principles expressed in their mission statements — but with one gap, the investments made out of their endowments. That’s where mission-related investments (MRI) come in, as they help foundations leverage the resources in their endowments for positive financial and social change.Broadly speaking, MRI are financial investments that follow an organization’s mission, with a goal of generating both social and financial return. ...

The U.S. Department of the Treasury plans to withdraw proposed regulations issued in August 2016 that would have narrowed or eliminated taxpayers’ ability to claim valuation discounts on transfers of interests in family-controlled entities.The Treasury Department’s October 2 announcement that it would withdraw the proposed regulations was part of a broader report on the Treasury Department’s review of tax regulations issued since January 1, 2016. The announcement identified one additional set of proposed regulations to be withdrawn entirely; three final, temporary, and proposed regulations to ...

Even highly responsible children can compound cyber risk to the entire household. They are more trusting than adults. They inadvertently engage with cyber thieves in gaming situations. Some work around security to see sites their parents don’t want them to visit. And, many of them are far ahead of their parents’ ability to keep them from making mischief online — in fact, many of them act as the family’s de facto tech support.Discuss the following tactics with your children to help them protect themselves, your family, and your assets.“Never talk to strangers, even online". Some people who you ...

In 360 B.C., the Greek philosopher Aristotle wrote of the distinction between simply giving away money and giving it away as part of a thoughtful process.In Aristotle’s words, whereas anyone can do the former approach, this latter approach to giving is “rare, praiseworthy and noble.” Now, thousands of years later, I couldn’t agree with Aristotle more, but with one caveat … This “noble” and “praiseworthy” approach does not have to be rare.Rather, what we call strategic philanthropy helps anyone take their check writing to a new level; all it takes is a kind heart. Indeed, unlike traditional, mo...

Buying or selling real estate, especially your personal home, presents a unique set of fraud and cyber-security risks. Protect yourself by understanding these risks and exercising the precautions below during real-estate and other high-value transactions.Understanding the RisksSeveral factors make real-estate transactions especially tempting to cyber-criminals.Public information on the sale. When a home is listed online, those listing details become publicly available. Cyber-criminals can monitor listing sites to learn when a transaction is likely to occur. They can also identify the listing a...

Transitioning a family business to the next generation is one of the most important and toughest business decisions a family firm owner will ever make. No other challenge has as much potential to exacerbate the special stresses—or, conversely, highlight the unique advantages—of operating a family-owned company.A family business should consider how to engage and empower the next generation for the role they'll play in governance, strategy-setting, and all other aspects of the business. However, a lack of a formal succession plan can lead to a number of problems when the current generation of le...

At first glance, the clothing company Patagonia, the cleaning products manufacturer Method, and the funding platform Kickstarter might seem radically different. After all, they come from vastly different industries.However, they are all benefit corporations, which means they belong to a new class of corporation in that they voluntarily meet higher standards of corporate purpose, accountability, and transparency.Companies can incorporate as benefit corporations in any state where such legislation has passed, and the process to become a benefit corp varies by each state. (See Benefitcorp.n...

After an unsolicited offer from a competitor, a family reflects on what they’ve built and the uncertain road ahead.The majority of family-owned businesses have no formal succession plan or successor leaders in the wings. Equally troubling are the studies showing only 30% of family businesses surviving through the second generation.Successful transitions are the result of early planning, ideally years before the change in ownership or control. Does this mean an unplanned transition is doomed to fail? In short, no. And, our case study outlines one example of a successful transition.In our white ...