A family office is an entity that provides complex financial and advisory services to support a specific family group. It integrates services like investment management, tax planning, estate planning, asset protection, and personal services. Family offices can be structured as single-family offices serving one family or multi-family offices serving multiple families. They provide a comprehensive set of services and help families achieve their financial, philanthropic, and wealth transfer goals over multiple generations. Real estate is a common direct investment for family offices, either through individual projects or real estate funds.

1. Non-Traditional Capital
Panel:
Family Office Investments
in Real Estate
February 26-27, 2015
Thomas J. Handler, J.D., P.C.
© 2015 Handler Thayer, LLP
2015 University of Florida Bergstrom Center
Real Estate Trends & Strategies Conference

2. Understanding Family Offices
What is a Family Office?
 A family office is an entity that supports the complex financial needs of a specific family group
and acts as their “chief advisor”
 A family office integrates the execution of investment strategy, tax services, insurance planning, philanthropic
advice, estate tax planning, asset protection planning, risk management, pre-marital planning and personal
services
 A family office provides ongoing, holistic advice, implementation and administration
 A family office is the global best-in-class structure for long-term wealth management and
preservation
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3. Types of Family Offices
 Serves the needs of more than one family with similar values and
investment philosophies
 Combines resources for efficiency
 Creates a single point of contact for planning and implementation
 Shares family office functions
Multi-family
Office
 Created, managed and owned by an individual family
Single Family
Office
 Implementing the fundamental legal and tax structure underlying a
family office to achieve investment management synergies, asset
protection attributes, and wealth transfer objectives.
 The structure is utilized with both Multi-family Offices and Single
Family Offices
Virtual
Family Office
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4. Services Provided by Family Offices
Source: Family Office Exchange
Services Provided by the Office, 2006
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5. Detailed Family Office Services
Comprehensive Family
Office Services
Wealth Transfer Planning
 Develop objectives
 Diagram current plan
 Legal and tax strategies
 Financial modeling
 Action plan to implement changes
Liability Management
 Property & casualty insurance
assessment*
 Specialty lines of insurance*
 Personal security*
 Collectibles inventory, appraisal &
storage*
outsourced to third party providers.*
Family Philanthropy
 Multi-generational objectives
 Personal giving programs
 Private foundation management
 Strategy analysis and implementation
 Foundation and grant administration
Family Continuity/Education
 Family governance
 Family education plan
 Family meeting coordination
 Coaching and mentoring
 Coordination of outside advisors
Integrated Financial Services
 Balance sheet analysis
 Retirement planning
 Bank financing analysis & negotiation
 Life insurance analysis
 Private aircraft consulting
Tax Review & Compliance
 Review of individual & entity tax returns
 Estimated tax payments
 Year-end tax planning
 Tax legislation updates
Services are customized to address a wide spectrumof long-termfinancial needs.
Lifestyle Enhancements
 Personal bill paying*
 Domestic help and payroll*
 Property management*
 Concierge services*
 Travel management*
outsourced to third party providers.*
Client Information Mgmt
 Consolidated reporting
 Quarterly performance reports
 Online access to custom reports
 Document management and retention
 Record keeping for personal property
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6. Investments by Family Offices
Vary According to the Nature of the
Office
 Invest in both funds and specific projects
 Invest via family holding companies that look like funds
and via trusts
 Invest in real estate / mortgage hybrid funds
Single Family
Office
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 Tend to invest in funds
 When investing in specific projects, tends to invest as a
fund
Multi-family
Office

7. Investors / Decision-Makers
Understand who the decision-maker may be . . .
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 Investment Committee / Investment Officer / Fund Manager
Multi-family
Office
 CFO / CIO / Investment Committee / Fund Manager / Trustee /
Trust Investment Advisor
Single Family
Office
 CEO / CFO / Investment Committee / Trustee / Trust Investment
Advisor / Family Member
Virtual
Family Office
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8. Managing
Member
FLLC
Patriarch
Living
Trust
Matriarch
Living
Trust
Joint
International
Asset
Protection
Trust
Child’s
Trust
Child’s
Trust
Patriarch Matriarch Child #1 Child #2
VFO or SFO
G-1
Parents
G-2 and G-3
Advanced FLLC/FLP Structure
88

9. Rental Agrmts.Equip. Lease Mgmt. Agrmt.Mgmt. Agrmt.
Mgmt. Fees
Mgmt. Fees
Mgmt. Agrmt.
Mgmt. Agrmt.
Mgmt. Fees
1% GP Mgmt. Fees
FAMILY
FOUNDATION
EQUIPMENT
LEASING COMPANY
OPERATING
COMPANY
REAL ESTATE
LLC
FAMILY OFFICE
DESCENDANT’S
TRUSTS
OFF-SHORE
ASSET
PROTECTION
TRUST
FAMILY LIMITED
PARTNERSHIP #1
FAMILY LIMITED
PARTNERSHIP #2
FAMILY LIMITED
PARTNERSHIP #3
Mgmt. Agrmt.
DOMESTIC
ASSET
PROTECTION
TRUST
VFO and SFO
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10. Critical Investment Criteria
Direct Investments:
– Alignment of interests
– Minimum 3-5 year track
record
– Long-term
– Equal-basis investment
terms
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Fund Investments:
– Alignment of interests
– Back-end performance
compensation
– Hurdle rate
– Return of capital on preferred
basis
– No up-front commissions or
general partner / manager fees
– Efficient syndication / fund fees
– Intermediate term liquidity
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11. Investment Decision Review Framewor
Managing return expectations for accommodation of spending, inflation and increased purchasing power across generational needs
Determination of appropriate platform (in-house, consultants or partnerships)
Legal framework of underlying entities/beneficiaries require a high standard of care related to investment decisions
Family Offices face numerous objectives when establishing an investment policy
Coordinated global investment philosophy
Oversight of global and entity level asset allocation and performance metrics
Risk and reputational management
Establishing an investment policy requires considering these competing issues within a risk-controlled framework
If applicable, Philanthropic goals and Foundation management needs including required 5% spending rate and 2% excise tax on
realized capital gains
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12. Role of the Investment Committee
Benefits of
Investment
Committee
 Formalizes management process
 Provides format for "inclusion" of family members
 Outside members bring expertise - help "isolation" problem
Composition of
Investment
Committee
 Family members
 Outside advisors
 Outside investment professionals
Investment
 Written policy statement provides documents for family to "buy into" investment strategy
 Investment Committee serves as extension of or alternative to a Chief Investment Officer
 Education programs give family members the basics
Investment
Committee vs.
Investment
Consultant
 Consultants help to manage the process
 Investment Committee has responsibility for Asset Allocation Manager Selection
The Investment Committee
Functional
Investment
Committees
 Effective chairperson
 Flexible model - consensus vs. directed
 5-7 members
 3-4 meetings a year
 Actionable agendas
 Support material provided well in advance of
meetings
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13. Role of the Investment Committee
 Formalize the investment process
 Enhance the portfolio strategies
 Provide a sounding board for internal professionals
 Involve and educate family members
 Formalize family review and approval of the strategic investment process
Goals
 Select experienced investment professionals for the committee
 Use generalists with broad experience and specialists for key areas
 Appoint a strong, intelligent, well-respected Chairperson
 Ensure no conflicts of interest
Strategies
 Agree on a set of procedures and a decision-making process
 Develop a written Statement of Objectives and an Investment Policy
 Monitor the strategic allocation and asset classes
 Review the performance of managers
 Manage the strategy reassessment process
 Identify and investigate new investment alternatives
Responsibilities
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14. A Dynamic Investment Process
6. Sophisticated analytical reporting tools
regardless of custodian; web access
5. Global investment perspectives
4. Jointly establish implementation
strategy with client; considers
existing holdings
3. Global sourcing network along with
proprietary quantitative and qualitative
analysis and rigorous due diligence
2. Modeling tools using global capital
market assumptions and stress
testing
1. Assist with policy development; determine goals,
disbursement targets, diversification and volatility
framework is essential
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Custom-Tailored
Portfolios

15. Thomas J. Handler, J.D., P.C.
Chairman, Advanced Planning &
Family Office Practice Group
Handler Thayer, LLP
thandler@handlerthayer.com
191 N. Wacker Drive, 23rd
Floor
Chicago, IL 60606
312.641.2100
312.641.6866
WWW.HANDLERTHAYER.COM
Contact Information