Single-Family Offices: Structure, Setup and Day-to-Day Operations

A single-family office (SFO) is a private company set up to manage the wealth and affairs of one family. It typically oversees investments, accounting, tax coordination, estate planning, philanthropy and sometimes personal services, working only for that family. Unlike a multi-family office or wealth manager, an SFO has one client, which gives the family full control and confidentiality but also means the family bears the entire cost.

This guide covers when an SFO makes sense, how one is structured and regulated, what it costs to run and what its day-to-day operations look like. For investment approach and allocation, see family office investment strategies.

When does an SFO make sense?#

There is no fixed wealth threshold. The decision comes down to whether the benefits of a dedicated office outweigh its fixed cost and the work of running it. Signals that a family may be ready:

• Assets are spread across many advisers, custodians and entities, and no one has a complete picture.
• The family has substantial private investments, direct deals or real estate that wealth managers aren't set up to administer.
• A liquidity event, such as the sale of a business, has created a large pool of capital to deploy.
• Multiple generations or branches need coordinated but separate reporting.
• Privacy, control or a specific investment approach matters more than minimizing cost.

Comparing the options#

How an SFO is structured#

The family office itself is usually an LLC or corporation that employs the staff. It sits alongside, and services, the family's ownership structure, which often includes:

• Trusts holding assets for different generations, each with trustees and its own tax profile.
• Family holding companies or partnerships that pool family assets for investing, often with voting and non-voting interests to separate control from economics.
• Investment vehicles for specific strategies, such as a private equity holding entity, a real estate LLC or a co-investment partnership.
• A foundation or donor-advised fund for philanthropy.
• Operating business interests that may still be held by the family.

Entity design affects control, tax treatment, asset protection and how easily wealth passes between generations. The office's own ownership structure matters too. Some families structure the office (or an affiliated management entity) to provide investment management to family investment partnerships in exchange for fees and a profits interest, an approach informed by the U.S. Tax Court's 2017 decision in Lender Management, LLC v. Commissioner, which treated that family office as engaged in a trade or business. Whether that treatment is available depends heavily on facts, so it requires careful tax advice. See fund structures for the building blocks of partnerships and LLCs.

Regulation: the family office rule#

A firm that gives investment advice for compensation is normally an investment adviser under the Investment Advisers Act of 1940. The SEC's family office rule (Rule 202(a)(11)(G)-1) excludes qualifying family offices from the definition of investment adviser. In summary, an office qualifies if it:

1. Provides investment advice only to family clients, a defined group including family members within a set number of generations, their spouses, certain trusts and entities they own, and certain key employees.
2. Is wholly owned by family clients and exclusively controlled by family members or family entities.
3. Does not hold itself out to the public as an investment adviser.

An office that starts advising unrelated families, takes outside investors into its vehicles or markets its services can fall outside the rule and need to register or find another exemption. Other rules still apply regardless: family offices that trade public securities may have beneficial ownership filing obligations, large traders may need to file Form 13H, and institutional investment managers above the threshold must file Form 13F.

On the Corporate Transparency Act, FinCEN's March 2025 interim final rule exempted entities created in the United States and U.S. persons from beneficial ownership information reporting, so most domestic family office entities no longer file. Foreign entities registered to do business in the U.S. may still need to report.

Confirm how these rules apply to your structure with securities and tax counsel.

Staffing and cost#

An SFO's team grows with its scope. A lean office might have a head of office or CFO, a controller, an investment professional and an administrator, outsourcing tax, legal, audit and custody. Larger offices add a CIO, an investment team, tax specialists, risk and compliance staff, and personal services.

Assume a lean SFO for a family with $400M in assets:

That's 0.5% of assets per year before any investment manager fees on the underlying portfolio. Families should weigh it against the fees they would otherwise pay, the value of control and the quality of reporting and investment access the office delivers.

Core operations#

Whatever its size, an SFO typically runs a handful of recurring processes:

Accounting and consolidated reporting#

The office keeps books for each family entity and produces consolidated reporting across them. That includes reconciling custodial accounts, recording private fund capital calls and distributions, valuing direct holdings and tracking intercompany balances and loans between family entities. A double-entry general ledger for each entity, with a consistent chart of accounts, is the foundation.

Investment management#

Implementing the investment policy, selecting managers, diligencing direct deals, managing liquidity for capital calls and monitoring performance.

Tax coordination#

Collecting K-1s from funds and partnerships (which often arrive late), coordinating estimated tax payments, supporting estate planning and working with outside tax preparers.

Governance and family services#

Supporting family meetings and investment committees, maintaining entity records and documents, administering trust distributions and, in larger offices, coordinating philanthropy, insurance and personal services.

Controls and security#

Because SFOs move large sums with small teams, payment controls matter: dual approval for wires, call-back verification of payment instructions, segregation of duties between initiating and approving transactions, and a full audit trail of changes to records. Cybersecurity and privacy controls protect family information.

Setting up an SFO: step by step#

1. Define the office's mission and services in writing, agreed by the family.
2. Map existing entities, assets, advisers and accounts.
3. Decide on structure, ownership and governance of the office, with tax and legal advice.
4. Hire a head of office or CFO before the broader team.
5. Choose systems for accounting, reporting, document management and payments.
6. Draft an investment policy statement and decision process.
7. Migrate records and reporting, entity by entity, and run a parallel period before switching over.

How Privatis helps#

SFOs that run family investment partnerships and direct or co-investment vehicles can use Privatis for double-entry general ledgers with period close, capital calls and distributions with waterfall calculations, NAV and portfolio valuations and consolidated investor reporting. Family members can access statements, documents and K-1s through a portal, KYC/AML onboarding covers new entities, and an audit trail records every change.