As family offices navigate what experts call the greatest intergenerational wealth transfer in history, the process of succession planning is becoming increasingly complex — and urgent.
In this week’s lead story, Marcus Baram delves into the pressures facing family offices as they try to prepare for the transfer of an estimated $85 trillion by 2045. From evolving tax laws and the sunsetting of estate tax exemptions to high-profile legal disputes and the growing role of international assets, the hurdles are many.
Despite the stakes, only a little more than half of family offices have a formal succession plan in place. As Baram reports, advisers are urging families to engage next-generation heirs earlier, build internal teams and bring in outside experts to ensure continuity — and preserve harmony.
Also in this issue, Baram explores why family offices are betting on commercial office real estate despite widespread headwinds. Some see the current market disruption as a once-in-a-cycle buying opportunity, particularly in key markets across the U.S., Canada and the UK. With valuations down and remote-work trends in flux, offices with strong land value and repositioning potential are drawing investor interest.
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Fred Gabriel, Executive Editor
HANDPICKED: Why succession planning at family offices is getting more complex
By MARCUS BARAM
Succession and estate planning is getting more expensive and complex during the biggest wealth transfer in history.
Family offices are grappling with increasing legal, tax and emotional costs of such intergenerational transitions during pending U.S. tax changes, with the $13.61 million estate tax exemption set to expire at the end of 2025; high-profile legal battles within prominent families like the Murdoch clan and Singapore’s Kwek dynasty; and the changing expectations and demands of next-gen heirs.
Despite its importance, only 53% of family offices have a succession plan — and only half of those are formal written plans, while the rest are informal or verbal agreements, according to an RBC Wealth Management survey conducted last year. The top challenges to succession planning cited by respondents were not having next-generation members sufficiently qualified to assume control of the family office and next-gen members who are too young to plan for their future roles.
The head of a small family office in Texas said he’s the only member involved in the firm. Other family members “have never expressed any interest in the family office or the investment portfolio, so succession has been a big issue for us to think about.” As a result, he’s considering winding down the office and outsourcing most functions, hiring a nonfamily chief executive or joining a multifamily office.
“Things have often gotten more complicated,” said Mark Parthemer, chief wealth strategist and Florida regional director at the wealth management firm Glenmede. “Some of the things that drive complexity are tax planning and family dynamics — especially with blended families” and the increasing international footprint of larger family offices, he said. When a family patriarch or matriarch divorces and remarries or when a family expands its operations across borders to jurisdictions with a variety of tax and regulatory regimens, it can create challenges.
More than three-quarters of family office professionals surveyed by Ocorian, a provider of trust, administration and fiduciary services, have opened more offices in different countries in the past five years. A majority said they expanded due to the diversification and increasing sophistication of their investment portfolios.
Tax concerns have also enhanced migration — for example, the recent election of the Labour Party in the UK and its expected introduction of an inheritance tax that helped drive a net loss of 10,800 millionaires in 2024.
For wealthy families in the U.S., the estate tax exemption doesn’t matter as much as the tax rate, which has varied widely in recent decades, Parthemer said. In response, wealth advisers and their clients have created a growing world of vehicles such as special-purpose trusts, limited-liability corporations and limited partnerships to shield assets.
What makes it even more complex is that “these structures require active maintenance, especially with the pace of change when it comes to laws and regulations,” Parthemer said.
The intricacy of such structures and their maintenance can be daunting to next-gen members of a family, say wealth management experts. And it has led to a growth in building a professional team and often outsourcing some responsibilities that traditionally stayed within the family.
“We’re seeing a greater emphasis on ensuring there is a high-quality team and coordinating professional advisers from a variety of disciplines who understand the client and the client’s family and their dynamics and goals,” Parthemer said.
It can create problems when the current generation becomes incapacitated, creating a leadership and competence gap, said Asin Nurani, managing director of family governance at RBC’s Enterprise Strategic Client Group. That scenario highlights the need to start succession planning as early as possible.
“The best time to chart a course is when sailing on smooth waters and not when sailing through a storm,” Nurani said.
Plan before the storm
To get ahead of the storm — such as the potential expiration of the Trump tax cuts at the end of this year — it’s best to plan now. Preparation and education are necessary for family heirs, said Michael Warszawski, the founder and CEO of the New York-based multifamily office CWM Partners. “That includes the engagement of family members who have not been involved so far, so that they understand what they’ll be inheriting.”
Beyond the financial concerns, such succession and estate planning creates a huge emotional component, Warszawski said. “Human capital is probably the biggest asset on a family’s balance sheet,” he said. “The members of my family — are they thriving? What are their hopes and wishes? And how are their relationships with each other? As a potential leader of the family, what are their talents and strengths? How will I help them to keep thriving after I’m gone?”
Without answering those questions, a succession plan is doomed to fail and is more prone to misunderstandings, disagreements and lawsuits, Warszawski said. One of the only ways to answer those questions is to prepare potential successor candidates by bringing them into the family office for a year or two “and to get a feeling for whether it’s the right fit for them.”
Patty Fitzsimmons, vice president of accounting at Aquilance, helps wealthy families navigate these transitions, which have gotten more complex “as they grow and add multiple houses and have multiple entities. They have many trusts set up and family partnerships, and we work with the individual family members to do distributions and any cash movements that need to be made.”
The first step with new clients, Fitzsimmons said, is to establish a baseline by taking what she calls a “digital shoebox” of their financial statements and rebuilding their balance sheet, which helps the next generation assess the family’s assets and legacy.
In addition, it’s key to consider the financial goals of the family office and the family’s values, said Maryann Bell, a partner at Wingspan Legacy Partners in Chestnut Hill, Massachusetts. Then, when it comes to identifying potential successors, “consider engaging external advisers, such as family office consultants, estate planners or wealth managers, to provide guidance and expertise,” Bell said. “Their impartial perspective can help with navigating complex family and financial dynamics.”
Family offices see opportunities in commercial office sector
By MARCUS BARAM
Family offices continue to seek opportunities in commercial real estate, especially the office sector, during market volatility and trade tensions. That’s despite the fact that the sector faces headwinds such as low occupancy rates and lower valuations due to rising interest rates.
Over the past 1½ years, 28% of family offices surveyed by Knight Frank said they have increased their investment in real estate — with office space the top category, followed by luxury residential, industrial properties and hotels. In addition, 44% of them said they plan to increase their investment in real estate in the near future — especially in the U.S., Canada and the UK.
Among them is Eti Lazarian, a principal at the Elle Family Office, a single-family office for the Atlanta-based family.
“We are opportunistic buyers who recognize the office market is undergoing a natural reset similar to the housing correction in 2008,” she said. “Real estate moves in cycles. While the office sector is currently in transition, it still has significant long-term potential.
“Our strategy focuses on acquiring office properties with substantial, foundational land value in high-density, prime areas, in addition to securing assets at highly strategic valuations. This affords … the flexibility to reposition and align these high-value assets with evolving market demand, whether that is through conversion to multi-family, hospitality or other to-be-determined uses.”
Also eyeing the sector is Lane MacDonald, CIO of Boston-based SCS Financial, a multi-family office with $33 billion in assets under management and a greater appetite for high-risk, high-reward investments.
“I think there are pockets of real estate where there is real value — certainly some distress on the commercial office side, where there could be some opportunities there,” he said.
Recently, the New York-based Kaufman Family Office ramped up its commercial real estate investments — committing over $250 million to acquisitions, with a focus on stable, long-term assets.
Real estate experts see a rebound in the sector as more companies reduce their tolerance for work-from-home arrangements. Though demand for office space fell by about 41% from 2019 to 2023 among companies that expected workers to be in the office only one day per week, it grew by 1% for those that expected employees to be on-site for four or five days a week, according to Preqin.
In the fourth quarter last year, private capital office deals globally surpassed $10 billion for the first time since 2022. And CBRE expects demand to lower prime office vacancy rates to prepandemic levels of 8.2% by 2027.
For family offices — which have long regarded real estate as a critical investment for maintaining generational wealth due to its tax benefits, cash flow and long-term appreciation — the disruption in commercial office presents an opportunity. They are investing in the sector through “private credit, preferred equity or historical limited-partner positions,” the consulting firm RSM US wrote in a report.
“Private capital is poised to play a critical role in the recovery,” Will Matthews, Knight Frank’s head of commercial real estate research, said in a statement, describing the role of family offices. “All of this points to 2025 as a turning point, with increased capital flows driving renewed momentum.”
LOOSE CHANGE
Billionaires lose billions in one day from tariffs: The world’s 500 richest people saw their combined wealth plunge by $208 billion Thursday as broad tariffs announced by President Trump sent global markets into a tailspin.
Golden visa reset tempts wealthy to eye New Zealand: The South Pacific nation says it is seeing “red hot” interest in its revamped visa program from the U.S. and Europe as rising geopolitical tensions prompt wealthy people to consider options abroad.
Goldman opens private equity deals to rich individuals: The investment bank is launching an open-ended private equity fund named G-PE, which will offer access to deals from its buyout, growth, secondary and co-investment strategies.