Family office setup: when your wealth justifies one, and where to base it
A family that had just sold a business suddenly held a portfolio split across three banks, two countries and several advisors who never spoke to each other. Each optimised their own slice, nobody watched the whole, and the important decisions were made late. The question that eventually reached the table was not how to invest better. It was who governs all of this. That is the question a family office exists to answer.
What a family office actually is
A family office is the structure that centralises the management of a family's wealth: investments, entities, real estate, tax planning, succession, reporting and sometimes personal services. It is not a financial product and it is not a tax regime. It is a team, whether owned or contracted, whose job is to make sure one head sees the whole picture and governs it with clear rules instead of scattered decisions.
The common confusion is to think a family office exists to lower tax. Tax efficiency is a consequence of the family's tax residence and of how the entities beneath are organised, not of the family office itself. What the family office adds is coordination: making the investment strategy, the holding structure and the succession plan all point the same way.
The real threshold
The most common mistake is building too much structure too early. A dedicated single-family office, with its own staff and premises, carries a fixed annual cost that only makes sense against very large assets. So the answer is not a magic number, it is a model matched to the size of the wealth.
| Approximate wealth | Model that usually fits |
|---|---|
| Roughly $5M | Lean or virtual structure: a clean holding, one coordinator and contracted providers |
| $20M to $100M | Multi-family office: shares team and infrastructure with other families, cost split |
| Above $100M | Dedicated single-family office: own team, when the fixed cost is justified by the assets |
Below the tens of millions, a dedicated team is usually uneconomic. What does make sense is the invisible part of a family office: a well-designed holding, clear governance over decisions, and a coordinator who unifies the existing advisors. That captures most of the benefit at a fraction of the cost.
Where to base it
The jurisdiction of a family office is not chosen by fashion or by ranking lists. It is chosen on three things: the family's tax residence, where the assets are concentrated, and what regime applies to the managing entity. Hubs such as the UAE, Switzerland, Singapore and Luxembourg appear often for large wealth because of their stability, their banking and their regimes for investment vehicles, but the right choice depends on the specific case and on current law at the time of setting it up.
One principle always holds: the entity that manages the wealth must have real substance and be coherent with the family's tax residence. Building a structure in a country the family has no genuine connection to is the short road to a tax authority ignoring it. The specifics of regime, cost and substance requirements are confirmed against current law in each jurisdiction before deciding.
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Start my assessment →What a well-built family office does
1. Consolidates the whole picture
Brings investments, entities, real estate and debt onto one board, so decisions are made on the whole rather than bank by bank.
2. Orders the entities beneath
Designs the holding and the layers that hold the assets, aligned with the family's tax residence and substance requirements.
3. Governs the decisions
Defines who decides what, how returns are shared, and what rules apply in a succession or when new members join.
4. Coordinates the specialists
Unifies lawyers, accountants and bankers under one strategy, instead of each optimising their piece in isolation.
The right order
A family office is not the first step, it is the one that orders the others. Before building it, the family's tax residence and a coherent holding should already be settled; the family office is built on top to govern all of that over time. Starting with the office before the structure is putting a team in charge of wealth that is not yet organised.
Frequently asked questions
At what net worth does a family office make sense?
A dedicated single-family office with its own team starts to make sense in the tens of millions of dollars and above, because its fixed cost only makes sense against large assets. Below that, a multi-family office or a lean, virtual structure usually delivers most of the benefit at a fraction of the cost.
What does it cost to run a family office?
A dedicated family office with staff, an office and providers can cost hundreds of thousands of dollars a year in fixed costs. A virtual or shared model reduces that to a fraction. The exact cost depends on the country, the team and the assets, and is confirmed when the structure is designed.
Where should a family office be based?
The jurisdiction is chosen by the family's tax residence, where the assets sit and what regime applies to the managing entity. The UAE, Switzerland, Singapore and Luxembourg are common for large wealth, but the right choice depends on the case and on current law, not on a generic list.
Does a family office reduce tax by itself?
No. It is a governance and management structure, not a tax regime. Efficiency comes from the family's tax residence and the holding entities underneath. The family office coordinates all of that, but it does not replace proper residence and structure planning.
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