There is no standard legal structure for family offices. The types and number of legal entities used in a family office differs depending on each family’s vision and goals, the family’s investment strategy, and the scope of services to be provided by the family office. There are, however, several types of family offices commonly seen in practice.

In some cases, a family office (by design or default) may begin functioning inside of a family’s operating business. In this scenario, a non-family member CFO or other trusted executive may begin handling the founder’s personal investments and financial affairs, in addition to managing the day-to-day affairs of the business. If the operating business is sold or if company resources available for managing the family’s business and personal affairs are stretched too thin, the family may establish a more formal family office structure outside of the business.

The single family office (or SFO) is a family office that provides one or more services (such as investing, estate planning, tax, and philanthropy) for one family. The family members served by the family office may consist of one immediate family or several generations and multiple branches of an extended family. To the extent that the family has a shared vision and common goals for its family office, the SFO necessarily operates in complete alignment with the family—its only client.

The multiple family office (or MFO) is a business that provides family office services to multiple unrelated families. In some cases, MFOs started as SFOs and over time began managing assets for other families. Examples of SFOs that transformed into MFOs include Bessemer Trust and Rockefeller & Co.

When it comes to family offices, no one size fits all. The structure of each family office is determined by the family’s wealth and objectives, the number of family members participating in the family office, and the scope of services provided by the family office.

Source: Frederic L. Smith Jr., July 20, 2017, http://www.lexology.com/library/detail.aspx?g=40f1c1db-f032-4d45-a0b8-b07a8863417d