Thomas J. Handler, Handler Law LLP managing partner, joined Angelo Robles on the Effective Family Office Podcast to discuss best practices in structuring a modern Single Family Office (SFO). The conversation explored the critical legal, tax, and governance considerations that family offices must address to optimize privacy, succession planning, and tax efficiency.

Key Takeaways:

• The Importance of Proper Structure: Many family offices are loosely structured, leading to unnecessary tax leakage, privacy risks, and governance challenges.
• Lessons from Case Law: The Lender Family vs. IRS case highlights the importance of structuring a for-profit family office to align with legal and tax best practices.
• Choosing the Right Entity: The trend among sophisticated SFOs is to establish the family office management company as a C-Corporation, allowing for enhanced executive compensation, retirement planning, and tax efficiency.
• Domicile Matters: Selecting a jurisdiction with strong asset protection (e.g., Delaware, South Dakota, or Nevada) is critical to safeguarding family wealth.
• Avoiding Common Pitfalls: Embedding family office functions within an operating business is a major legal and financial risk that can lead to compliance violations, lawsuits, and governance failures.
• The Role of Non-Family Executives: Including independent board members or non-family key executives strengthens the family office’s legitimacy and can help withstand IRS scrutiny.