The family office structure: A comprehensive guide

High net-worth individuals (HNWIs) and ultra-high net-worth individuals (UHNWIs) are increasingly turning to family offices to manage their complex financial needs.

But having a family office is not just about managing wealth but also about projecting an image of success, sophistication, and influence, thereby enhancing social status.

But what exactly is a family office and how is it structured?

In this article, we look into the various family office structures, exploring their differences, advantages, and key challenges.

We’ll also dissect how the family office structure influences governance, service delivery, cost models, and long-term wealth preservation strategies.

Ready? Let’s go!

What is a family office?

Let’s start with the basics. A family office is essentially a private wealth management advisory firm that serves ultra-high net-worth individuals. They’re different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of a wealthy individual or family.

A family office is essentially a private wealth management advisory firm that serves ultra-high net-worth individuals.

Think of it as a one-stop shop for all your financial needs (minus the hassle of long checkout lines).

The family office structure is often built around core pillars including investment strategy, tax optimization, estate planning, family governance, and lifestyle services.

The typical family office structure is either a single-family office (SFO) or a multi-family office (MFO), each with distinct structures and benefits. Let’s take a look at each one, beginning with the SFO structure.

The single-family office structure

A single-family office (SFO) is dedicated to managing the wealth of one family. This type of family office organizational structure is highly personalized, allowing for customized financial and investment strategies that cater to the specific needs and goals of a single family.

Key functions of a single-family office

An SFO provides a long line of services that often include investment management, estate planning, tax services, philanthropy coordination, and lifestyle management. In these digital times, different kinds of family office software are central when carrying out these services.

Advantages of the SFO model

The primary advantage of an SFO is its ability to offer tailored financial solutions. The family has great control over investment decisions, ensuring that strategies align precisely with their objectives and risk tolerance. Additionally, an SFO provides enhanced privacy and confidentiality, as all financial matters are handled internally.

Another significant benefit is that in contrast to an MFO, where profit is a motive, the staff in your SFO is employed directly by you and solely focused on your interests, ensuring personalized and unbiased wealth management.

Another significant benefit is that in contrast to an MFO, where profit is a motive, the staff in your SFO is employed directly by you and solely focused on your interests, ensuring personalized and unbiased wealth management.

Internal team roles and reporting lines

Structurally, the single-family office is often led by a Chief Executive Officer (CEO), supported by a Chief Investment Officer (CIO), Chief Financial Officer (CFO), General Counsel, and heads of specialized domains such as tax, legal, real estate, philanthropy, cybersecurity, and family education.

Larger SFOs also introduce roles like Chief Operating Officer, Head of Risk, and Family Governance Officers to manage intergenerational dynamics and institutionalize best practices across generations.

Governance in the SFO structure often involves a Family Council and/or a Board of Directors that oversees strategy, approves major investment decisions, and ensures the family’s values and vision are embedded into the operating model.

Limitations and cost considerations of the SFO model

On the downside, setting up and maintaining an SFO can be costly, requiring significant resources to hire and retain a team of specialized professionals. The complexity of managing diverse aspects of wealth, from investments to philanthropic endeavors demands a high level of expertise and oversight.

Depending on the jurisdiction and the complexity of the family’s holdings, the legal family office structure may also incorporate multiple entities – such as limited liability companies (LLCs), private trust companies (PTCs), and offshore structures – to optimize taxation, asset protection, and regulatory compliance.

Ultimately, the single-family office structure is best suited for families with assets exceeding $100 million, who require a bespoke, confidential, and fully integrated wealth management platform.

On to the MFO structure.

The multi-family office structure

Shared infrastructure and cost advantages

In contrast, a multi-family office (MFO) serves multiple families, sharing resources and costs among them. The multi-family office structure offers similar services to those of an SFO but generally at a lower cost due to the economies of scale achieved by serving several families. You can think of it a little like a high-end financial carpool.

The shared nature of an MFO allows families to benefit from cost efficiencies and access a broader range of expertise and resources than they might afford individually. This collective approach also fosters enhanced networking opportunities, as families can connect with others facing similar challenges and opportunities.

The shared nature of an MFO allows families to benefit from cost efficiencies and access a broader range of expertise and resources than they might afford individually. This collective approach also fosters enhanced networking opportunities, as families can connect with others facing similar challenges and opportunities.

Roles and governance in an MFO

A typical multi-family office structure includes key roles such as a Managing Partner or CEO, investment directors, tax and legal advisors, estate planners, and relationship managers who all work together within a centralized, professionally governed entity.

MFOs are often structured as registered investment advisors (RIAs) or operate within private banking divisions, providing a comprehensive platform that blends asset management, tax optimization, estate planning, and family governance.

Limitations and trade-offs

However, the shared resources and services may result in less personalized attention compared to in an SFO. Additionally, managing the diverse needs and objectives of multiple families can sometimes lead to potential conflicts, requiring careful coordination and communication.

Unlike single-family office structures where each component is fully customized, the MFO structure relies on standardized processes and service tiers to balance personalization with scalability.

Data security and reporting structure

The legal structure of an MFO typically involves centralized operating companies with client-segregated reporting protocols, supported by secure family office platforms like Aleta.

Is the MFO model right for your family?

This type of family office structure is most effective for families with assets ranging from $25 million to $250 million, who value access to institutional-grade expertise while avoiding the fixed overhead of running an SFO.

While SFOs and MFOs represent the traditional models of family wealth management, the increasing integration of technology has given rise to a new and innovative approach, namely the virtual family office (VFO).

The virtual family office structure

A virtual family office structure (VFO) leverages technology to offer family office services without necessarily maintaining a physical office.

Centralized wealth management without physical presence

This type of family office structure is designed to centralize wealth management functions through digital coordination rather than physical presence, making it ideal for globally dispersed families or those seeking maximum operational agility.

VFOs can be structured as both SFOs and MFOs. Both types capitalize on digital platforms and technology to provide seamless, flexible, and efficient services, which can be particularly advantageous in today's increasingly digital world.

Key technologies and operational setup

Typical components of a virtual family office structure include cloud-based investment dashboards, encrypted communication systems, digital document storage, and virtual collaboration tools to coordinate tax, legal, and estate planning services across jurisdictions.

A virtual family office may engage a core team of one or two trusted professionals – such as a part-time CFO or family wealth coordinator – who oversee outsourced service providers and ensure continuity across all areas of financial and governance planning.

This model can be cost-effective and flexible, providing access to a wide range of expertise remotely.

It allows families to avoid the fixed overhead associated with traditional office setups while maintaining strategic oversight over their assets.

Who the virtual family office is right for

The virtual family office structure is increasingly adopted by entrepreneurial families, tech founders, and those in early liquidity stages, particularly when AUM ranges between $10 million and $100 million.

While it lacks the in-person intimacy of a traditional SFO, the VFO structure enables families to build bespoke, digital-first ecosystems that evolve with their goals and risk profiles.

Other types of family office legal structure: Key considerations

One thing is choosing between an SFO and an MFO structure. You also need to choose the right legal structure for your family office. Making the right choice is critical for efficient operation, regulatory compliance, and wealth protection.

The legal structure of a family office determines not only how responsibilities are delegated and liabilities managed, but also how wealth is preserved, taxes are optimized, and intergenerational control is enforced.

There are different kinds of family office legal structures, each offering distinct advantages.

The most frequently used structures include limited liability companies (LLCs), partnerships, trusts, and hybrid structures.

Limited Liability Companies (LLCs)

LLCs might be the most popular way of structuring a family office. They’re favored for their flexibility and liability protection. They separate personal and business liabilities, safeguarding family wealth. An LLC’s operating agreement can be tailored to define management roles, decision-making processes, and profit distribution, offering high control and adaptability.

In many jurisdictions, LLCs used as the foundation of a family office structure also support tax pass-through treatment, enabling more efficient alignment of taxable income with family objectives.

Partnerships

Partnerships, particularly limited partnerships (LPs), are common in family offices. In an LP, general partners manage the partnership and assume liability, while limited partners contribute capital and enjoy liability protection up to their investment amount.

This structure allows family members to invest passively while benefiting from profits without daily management responsibilities.

Partnerships are especially attractive when structuring investment entities within a family office, such as pooled private equity or venture capital arms, due to their flexibility and capital-raising dynamics.

Trusts

Family office trust structures are essential for estate planning and asset protection. A trustee manages assets on behalf of beneficiaries according to the trust agreement, providing tax advantages and shielding assets from creditors. Trusts control wealth distribution to future generations, aligning with the family’s long-term goals.

They also add a layer of governance and discipline to the family office structure, especially when combined with purpose clauses, charitable missions, or sunset provisions.

Hybrid structures

Some family offices combine elements of various structures to meet specific family needs. For example, a family office might operate primarily as an SFO but use a trust structure for specific assets or for philanthropic activities to gain tax advantages and other benefits.

Hybrid family office structures are increasingly used by globally active families who require a combination of flexibility, cross-border tax optimization, and differentiated governance for different pools of assets.

Selecting the appropriate family office structure involves assessing the family’s asset complexity, liability protection needs, tax implications, and desired management control.

Legal structuring is not static. It should evolve alongside the family’s financial maturity, jurisdictional footprint, and generational transitions.

Now that we’ve covered the legal structure of a family office, it’s time to take a look at the family office fee structure.

Understanding the family office fee structure

As mentioned earlier, SFOs are not trying to make a profit from managing your wealth. Typically, there are no fees involved, as you are the sole bearer of the costs of running the family office.

Cost structure in a single-family office

In a single-family office structure, costs are treated as internal expenditures – covering salaries, office space, technology, legal and accounting fees, and outsourced services – rather than externalized fees.

The family typically sets an annual operating budget based on the complexity of services provided, ranging from $500,000 to several million dollars per year, depending on AUM, geographic scope, and service intensity.

Fee models in multi-family offices

In MFOs, fees can be structured as fixed fees, percentage-based fees, or performance-based fees.

Fixed fees offer predictable costs but may not align the office’s interests with the family’s. Percentage-based fees, calculated as a percentage of assets under management (AUM), incentivize better asset performance but can become costly as wealth grows. Performance-based fees charge a percentage of profits, aligning goals but potentially encouraging higher risk.

The fee structure in a multi-family office structure often reflects the bundled nature of services, where wealth management, estate planning, tax compliance, and concierge support are combined into tiered service packages.

Common fee ranges for MFOs include 0.50%–1.00% of AUM for investment management, plus retainers between $25,000 and $250,000 annually for legal, tax, and operational services.

Some MFOs also offer hybrid fee models, combining a base retainer with performance-based incentives to align better with long-term wealth preservation goals.

Total cost visibility and strategic alignment

Understanding the full cost of your chosen family office structure (including direct costs, outsourced services, and hidden opportunity costs) is crucial to optimizing operational efficiency and transparency.

Other aspects of the family office structure

Family office tax structure

The chosen family office entity structure has different tax implications. Due to the complexity of tax laws, especially when assets and family members span multiple jurisdictions, family offices typically invest heavily in tax planning and compliance. This may involve careful planning of the transfer of wealth to succeeding generations.

The tax structure of a family office is influenced by its legal form (e.g., LLC, LP, trust), geographic location, and the tax residency of its beneficiaries.

Key tax considerations within a family office structure include capital gains optimization, estate and gift tax planning, generation-skipping transfer (GST) tax strategies, and foreign account reporting obligations such as FATCA and CRS.

Many sophisticated family office structures incorporate dedicated tax entities, such as family holding companies or private trust companies, to streamline income allocation and enhance tax efficiency.

Jurisdictional arbitrage (strategically locating entities in favorable tax environments such as Delaware, Singapore, or Switzerland) is another core component of effective family office tax structuring.

Family office staff structure

The staff structure of a family office typically includes financial advisors, investment managers, tax specialists, estate planners, and sometimes, legal advisors. The composition of the team depends on the specific needs of the family.

In a robust single-family office structure, roles may extend to include a Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Financial Officer (CFO), General Counsel, lifestyle managers, and dedicated philanthropy officers.

Smaller or virtual family office structures may rely more heavily on outsourced professionals, coordinated by a lean internal team or even a single family office director.

The effectiveness of the staff structure is not only in the expertise of individual professionals but in how well their roles align with the governance framework and long-term objectives of the family.

As families evolve, so too must the human capital strategy behind the family office – requiring succession planning, leadership development, and retention policies tailored to multi-generational continuity.

Conclusion

Understanding the various family office structures is crucial for wealthy families seeking to manage their wealth efficiently. Whether opting for a single-family office, multi-family office, or exploring virtual and trust structures, the choice should align with the family’s unique needs and objectives.

Selecting the optimal family office structure involves a strategic evaluation of several dimensions, including jurisdictional tax exposure, asset complexity, governance requirements, operational risk tolerance, and generational transition plans.

No matter the type – whether an embedded structure, a formal single-family entity, or a tech-enabled virtual model – the right family office structure should serve as the organizational backbone for financial clarity, control, and continuity.

By considering factors like cost, control, customization, and legal implications, families can create a robust framework for wealth management that ensures long-term prosperity and legacy preservation.

Ultimately, a well-designed family office structure empowers families to act with intention, preserve values across generations, and withstand the evolving financial, legal, and geopolitical landscapes that shape wealth today.