Why there is no ideal family office structure — and what to build instead

Families are constantly offered "ideal" SFO structures built around tax efficiency or governance frameworks. Anyone who has spent time in the space knows the universal template does not exist.

A family office is a tool designed to serve a specific purpose. Because no two families share the same DNA, no two family offices will look the same, even when they share many similarities. Families must resist the pressure of "industry best practice" and place their own purpose at the centre of every structural decision.

The human factor

Tax optimisation is one component of wealth preservation. It should never be the primary driver.

A structure built solely on tax efficiency often ignores the practicalities of daily life. Family members are not mobile capital units. They need stability. For many, moving across the world for a tax gain is simply not an option. An "ideal" structure that forces heirs into a lifestyle they do not want is, by definition, a failure. The family office exists to serve the family's common goals, not the other way around.

The trap of losing control

One of the most common recommendations for "ideal" structuring involves trusts or similar vehicles — Stiftungen, foundations, and the like. These are excellent tools for tax-free portfolio growth, but they demand a heavy price: the surrender of legal ownership and direct influence.

For a passive, asset-manager-type SFO, this trade-off may be acceptable. For an active family, it is a strategic error. I doubt families like Mars or Michelin would want a board of trustees standing between them and the companies bearing their names. They operate on the conviction that their own leadership creates more value than any external board ever could.

Before choosing an "optimised" structure, a family must decide whether it wants to be a passive beneficiary or an active steward — for the current generation and the ones to come. Those who believe they can outperform a passive stock index across generations, as their parents and grandparents did, will choose the latter.

Easy to build, hard to dismantle

When structuring is driven by technical optimisation rather than long-term purpose, the result is the mille-feuille effect: a complex, multi-layered pyramid of trusts, holding companies, and offshore entities.

On day one, the logic is rock-solid. One layer eases dividends, another provides a veil-piercing firewall, the next is bankruptcy-proof, and so on. But the world is not static. Regulations evolve. Consider the common scenario in which an heir moves to the US for university and stays for work. Suddenly, the long arm of the IRS turns that sophisticated Guernsey trust into a toxic liability.

In long-term structuring, two rules are absolute:

• Less is better than more.
• The true test of a structure is not how it is built, but how quickly and at what cost it can be dismantled.

Beyond the technical headache, these structures are often unity-killers. When the protective walls of a trust become a cage, the legal struggle to unwind them triggers the very friction they were meant to prevent.

The Murdoch lesson

The public disputes within the Murdoch family highlight a critical lesson: a trust is not a recipe for peace. While marketed as a tool for stability, it can become catastrophic for unity if it locks members into a vision they no longer share. I am quite sure that, in 1999, Rupert Murdoch did not expect his irrevocable trust would eventually cost billions to settle disagreements between three of his children.

A structure should never be viewed as a unifying factor. It is often a divisive wedge. The goal is to separate family unity from joint ownership. It is entirely possible for a family to remain united even when their paths diverge on specific assets.

Unity is not uniformity.

Concluding thoughts

The only truly "ideal" family structure is one that remains flexible. Rather than seeking technical perfection, aim for a framework that prioritises human alignment.

For families reviewing their structure, three principles to apply:

• Prioritise reversibility. Before implementation, ensure there is a mechanism for future principals to adapt the structure to changing circumstances.
• Organise exit processes. Establish rational, pre-agreed mechanisms for members to separate their wealth without triggering emotional disputes or fire sales.
• Stay service-oriented. Treat the family office as a servant of the family's shared project, not an end in itself.

The most successful families are not those with the most complex tax loops. They are those agile enough to adapt when the next generation decides to chart a different course.