2022 FOX Family Office Forum Recap – Day 1

Date: Jul 21 2022

Erin Hulse


Erin Hulse is the Founder of Deviate Consulting, LLC, which focuses on accounting, software consulting and selection for family offices, investment advisors, hedge funds, fund administrators and small businesses throughout the world. Software focus includes multiple investment accounting, portfolio accounting and wealth management suites prominent in the industry.

Learn More About Deviate Consulting →


Welcome to the Forum

Glen Johnson, Peter Moustakerski - FOX

  • Who is in the room – 45% new FOX members; 69% Family office executives
  • Continued Disruptive Forces – Transitions, Talent, Technology
    • New T – Time – More issues around time crunch with workload and employee shortages
  • Evolution of Family Wealth and The Family Office – What are your clients concerned about?
    • Succession Planning
    • Tax Law Changes
    • Family Learning
    • Cybersecurity
  • Evolution of Family Wealth and the Family Office – 1980’s – 2000s and Beyond
    • Wealth 1.0 - Rational transactional advice, Preserve and grow the wealth, Multi-gen wealth view Family Office
    • Family Office 1.0 - Recruit FO talent and best-in-class advisors, Peer-based benchmarks and best practices, Focus on tax, investments and reporting
    • Wealth 2.0 - Holistic financial and wealth planning, Focus on “shirtsleeves-to-shirtsleeves,” Enter family dynamics & the “rising gen”
    • Family Office 2.0 - Govern a multi-gen family enterprise, Deliver professional wealth management, Educate owners to be investors and trustee
    • Wealth 3.0 • Psychology integral to advice • Focus on purpose of wealth • Shared values and positivity
    • Family Office 3.0 • Focus on values, purpose, sustainability • Outsource to ecosystem of specialists & firms • Formalize family learning and governance


2022 Trust, Tax, and Estate Planning Update

Jeremy Mertens, BDO

Adam Sherman, McDermott, Will & Emery

Mandy Chardoul, Plante Moran

Scott Winget, FOX, Moderator

  • Build Back Better Redux?
    • Democrats get one more bite at the budget reconciliation apple
    • Mid-term election in November
    • Constraints on more spending imposed by inflation, possibility of recession
    • Risk of grabbing low hanging tax fruit—prior proposals/legislation
  • Greenbook (aka the “Wishlist”)
    • Income tax rates
    • “Billionaires” income tax
      • Minimum 20% tax on income and unrealized capital gains
      • “Illiquid” taxpayers
      • Required reporting of basis and estimated value of assets
    • Deemed realization of capital gains (death, gifts, trust distributions)
    • Grantor trusts: sales recognized and tax payments = gifts
    • GRATs: minimum term and remainder interest
    • Limited duration of GST exemption
    • No changes to valuation rules, changes in exemption amounts
  • Anti-Anti Clawback Regulations
    • Regulations addressing potential for “clawback” resulting from increased exemption amounts added as part of 2017 tax reform included an anti-abuse placeholder
    • If exemption amounts are reduced in the future, these regulations would prevent benefit to taxpayers from having used higher exemption amounts on various “includible gifts”
    • 18-month window (pre-death) to fix
  • Opportunities, Trends, and Considerations
    • Interest Rates
    • Valuation
    • Market Volatility
    • IRS Backlog
    • Income Tax Rates
    • Liquidity
    • Cashflow
    • Recent Tax Law Changes (i.e. Secure Act)
    • Wealth Transfer Plan
  • Roth IRAs
    • Roth IRAs differ from Traditional IRAs
      • Not everyone can contribute to a Roth (income limitation)
    • However, there is no income threshold to convert an IRA from a traditional IRA to a Roth IRA
    • This inconsistency has created a “back-door” into a Roth IRA, which is still an available planning opportunity, but may not be much longer
    • Contributions and Deductibility
      • Maximum contribution of $6,000 ($7,000 age 50 or older)
      • Contributions are non-deductible
    • Taxability • All qualified distributions are tax free
    • No required minimum distributions
  • Roth Conversion Basics
    • A Roth conversion is a “qualified rollover contribution” from an eligible retirement plan
    • The portion of the converted amount included in income is equal to:
      • The amount of the conversion
      • (Less any after-tax contributions that are included in the amount rolled over)
    • Deadline for converting a Roth is December 31st
    • If the account owner is required to take a minimum distribution (RMD), they must do so for that tax year prior to conversion
    • Planning Note: Taxpayers are permitted to convert a portion of an eligible account to a Roth


  • The SECURE ACT “Light”
    • Setting Every Community Up For Retirement Enhancement Act passed in Dec. of 2019
      • Changed RMD age from 70.5 to age 72
      • Except for exceptions listed below*, changed inherited IRA lifetime stretch opportunity for many beneficiaries to much shorter time period)
      • Exceptions are granted for Eligible Designated Beneficiaries or “EDB” (NEW)
        • Surviving Spouse
        • Minor child of decedent (until they reach age 21)
        • Disabled beneficiary
        • Chronically ill beneficiary
        • Individuals who are around the account owners
  • Fiduciary Income Tax
    • State Residency Factors
      • Trust created by will of individual who lived in the state at time of death
      • Settlor lived in state at time inter vivos trust created
      • Trust administered in state
      • One or more trustees live in or do business in state
      • One or more beneficiaries live in state Residency Factors
    • Recent Cases
      • N.C. Dep’t of Revenue v. The Kimberly Rice Kaestner 1992 Family Trust (narrow ruling impacting state residency of trust)
      • Steuer v. Franchise Tax Bd (“Paula Trust”) addressing source and non-source income
    • Planning
      • Incomplete Non-grantor Trusts
      • Spousal Lifetime Access Non-Grantor Trusts


Exploring the Family Office Regulatory Landscape

Valerie Dahiya, Perkins Cole

David Allen, Katten Muchin Rosenman

Glen Johnson

      • Potential family office regulations and the Corporate Transparency Act are impacting family offices.
      • Examining the legislative shift that is placing the burden on family offices
        • What are the implications to existing and future family office structures?
        • Compliance
        • Privacy
        • Reporting
        • What is being done in Washington to bring an industry voice and balanced perspective?
      • Family office exemption notion was not well received
        • Need more education around the family office structure
        • Exemptions on reporting requirements are being applied to entities that are already regulated, not family offices
      • Looking at long term incentive programs
        • Who will participate and are they key employees?
        • Are they qualified clients/purchasers?
        • Need an employee co-investment vehicle
        • The family might want specific investments, so several structures might have to be created
      • Real Estate Impacts
        • Proposed rules around AML in real estate
        • Would capture a substantial amount of RE transactions
        • Pay close attention, as the consequences can be extreme for reporting
        • Looking for non-financed RE transactions
      • SEC Revisiting Accredited Investor
        • Higher standards due to inflation
      • Broker/Dealer Registration Requirements
        • SEC Aggressive on this matter
        • Relying on trader exception
      • Cryptocurrency regulations
        • Younger generations are excited by crypto
        • What to do for valuations?
        • What to do for recordkeeping?
        • The fundamentals that have been relied on are not put in place for crypto
        • Crypto best practices – same rules still apply for fundraising, etc.
        • SEC says the rules in existence are applicable, so no new rules necessary
      • Question: In terms of structure, how does the family office fit into the exemption?
        • Depends on the specifics of the office, but no action position was meant to be broad and cover as many family offices as possible
      • Question: Any insight on whether private trust company will be treated like a bank as far as regulations:
        • Family offices will not be exempt, but…
        • Private trust companies should not be treated like a bank


 Managing Rising P&C Premiums in an Evolving Insurance Landscape

Kimberlee Connell, Marsh McLennan Agency

Robb Lanham, HUB International Personal Insurance

Stephen Poux, AIG Private Client Group

Gaby Griffin, FOX, Moderator

      • Understanding how to manage the challenging insurance market
        • Steeply rising insurance P&C premiums
        • Canceled policies
        • How to keep premiums down
        • How to work with brokers to ensure best strategies
      • Billion-dollar weather and climate events have increased in recent years
      • Wildfire Mitigation Strategies
        • Hardscaping homes to mitigate risk
          • Ember resistant vents and gutter guards
          • Stucco exteriors when possible
          • Fire resistant landscaping
          • Sprinkler systems
          • Alternate water sources on property
          • Multiple ways to access property
        • Remove dead plants, mulch and other combustibles
          • Remove ornamental grasses
          • Store away furniture cushions and decoration from decks
          • Woodpiles or lumber
          • Vehicles, boats
        • Talk with your agent/broker about additional ways to mitigate loss
      • Severe Weather Preparedness
        • Back-up power source
        • Lightning protection
        • Elevated homes
        • Hail resistant roofing and windows
        • Back-up sump pump