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What Is the Difference—Family Office or Family Trust Company?

Family Offices are frequently confused with Family Trust Companies so let’s take a look at both.  As a starting point, realize that a Family Office “may” not be a Family Trust Company, but a Family Trust Company may also be a Family Office.  Confusing, right?  The difference revolves around the services offered by each and the powers granted by state statute.

A Family Office is created as a wealth management solution that offers a wide variety of integrated services with a highly personalized focus on serving a family (or group of families) while infusing the values of the family. The saying, “If you’ve seen one family office, you’ve seen one family office” is appropriate as they take various forms with customized services as unique as each family.  As outlined above, frequently some, or all, of the following services are offered: tax, accounting & financial; lifestyle; legal; investment; philanthropic; and family governance.

A Family Office can be set up in any state/jurisdiction, but a Family Trust Company may only be established in states with specific statutes that allow fiduciary powers to be granted to an entity serving one set of family clients.  If the proper steps are taken in a state with family trust company statutes, it can serve as trustee of family trusts through the fiduciary powers granted by state law.  However, a family trust company frequently also offers family office services, therefore, serving as both a family trust company and a family office.  Like a family office, a family trust company is as unique as the family it serves. 

Do you think that you or someone you know might be interested in setting up a family office and/or a family trust company? Click here to learn more about the guidance we can provide.

Disclosures: The information provided is general in nature, is provided for informational purposes only, and should not be construed as financial or legal advice. The views expressed by the author are based upon the data available at the time the article was written. Any such views are subject to change at any time. Clearstead disclaims any liability for any direct or incidental loss incurred by applying any of the information in this article. All financial decisions must be evaluated as to whether it is consistent with your objectives and financial situation. You should consult with a financial, tax, or legal professional before making any decisions.

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