One of the truisms that virtually everyone has heard is that ‘the rich get richer.’ Why is that? Well, in modern times one answer is that families of great wealth avail themselves of Family Office structures. So, what is a Family Office? It is a comprehensive team of professionals: the estate planning attorney, the tax attorney, the CPA, the financial planner, the investment adviser, the life insurance agent, the property and casualty insurance broker, and finally the family office administrator.
So what’s the big deal, you ask? Except for the family office administrator, don’t most people with reasonable assets and income employ all these professionals? Not really. Ask yourself: “When is the last time I got my estate planning attorney, tax attorney, CPA, financial planner, investment adviser, life insurance agent, and property and casualty insurance broker all together in the same room, working together on a comprehensive plan for me?” The answer for most people is “Never!” As a matter of fact, for most people, these professionals have never even spoken to each other, and most of the time, don’t even know each other’s names.
Why is this so important? Why could having all these professionals meeting on a regular basis be so important to you and your family? There are hundreds of questions that need to be answered every year. Here are a few of them:
1. Have you changed your will and trust since the birth, death or divorce of a child?
Probably not. Your lawyer doesn’t know about the changes, and you’re too busy.
2. Has your life insurance agent established the lowest-costing insurance available in the market this year, or simply used the company he has a contract with?
Most probably, he has a vested interest in selling and maintaining policies with his current company, not finding you the lowest cost among 1600 life insurance companies.
3. Has your CPA run a cost/benefit analysis on your life insurance policies?
Probably not. In a sample series of calls made in researching this article, I couldn’t locate even a single CPA who had ever received a request of this nature.
4. Has your property and casualty insurance been re-quoted every year to minimize the cost of coverage for your autos, homes, businesses, and everything else? Have these coverage been analyzed to make sure that the liability limits are sufficient to trigger your umbrella coverage?
Probably not. In fact, I was unable to find a single person who had ever had this done even once!
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