A Family Office’s Best Friend?

Over the years of working alongside a number of family offices, I continue to be impressed by the sincere care demonstrated for the family (or families) they serve. While we provide life insurance reviews, on-going service and marketplace insight on their current portfolios, we also strategize with family offices on how life insurance can support their overall objectives. After many discussions about the complexities and challenges of running a family office, could life insurance possibly be a “Family Office’s best friend”?

Initiating the Conversation

The process of buying life insurance is one focused on the next generation. As a mentor of mine told me early on, “Two types of people buy life insurance – those who care about someone and those who care about something besides themselves.” Especially when working with younger generations, any opportunity to discuss the sense of responsibility they should have to future generations and their family legacy is meaningful. A conversation regarding life insurance planning is another occasion for the family to consider who and what they care most about

A Business Model of Service

My experience with family offices has been an atmosphere of high touch and high service. Family offices are intentional about being advocates for their families; their service model intertwines both the personal and professional workings of a family. In order to do that well, there must be wealth to manage and revenue generated so resources are available to support all those important functions. When family trees branch farther and farther out, the level of wealth can be diluted while the service expectation from each increasing family member remains constant. One way to counter that reality is to intentionally plan for ways to mitigate depleting family wealth; revenue must match expectations and obligations. With careful planning to minimize income and estate taxes, wealth spent over multiple generations is naturally replenished by an injection of life insurance.

Forced Savings Plan

Paying premiums can serve as a savings mechanism for those who depend on future trust dollars and prevent current recipients from leaving little behind. This strategy can help family offices and those in a fiduciary role balance the demands of the current generation with the responsibility to look out for the interests of future generations.

An Asset Without Equal

Life insurance is still the only asset that avoids taxation at all levels and continues to be a vehicle used by wealthy families to accomplish explicit wealth transfer objectives. While GST-exempt Dynasty Trusts may hold a majority of family assets, inevitably there will be situations where assets outside the trust are susceptible to future taxation. Life insurance does not recognize income or gains requiring complex annual tax reporting (cash values grow inside the policy free from current taxation). As a prime example, private placement life insurance (PPLI) provides access to alternative investments, while being tax-efficient and eliminating the need to track down another K-1 or further complicate tax returns.

Life insurance may not be as warm and friendly as a golden retriever, but for a family office, at least you don’t have to worry about cleaning the carpets.


If you have questions or would like to see how the advisors at Rose Street Advisors can help you better serve your clients, please contact us below. We are here to help.

Rob Hunt II

LIC & CLU® | Principal & Chief Executive Officer

As Principal and CEO, Rob spearheads the vision, drive for growth, and pursuit of excellence at Rose Street Advisors. Rob loves being outdoors with his wife Erin and kids. He has slalom skied for the past 35 years, never missing a season. He also enjoys spending time at the lake and on the golf course.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact your Rose Street Financial Professional. Information obtained from third-party sources are believed to be reliable but not guaranteed.

Securities and Investment Advisory: Services offered through M Holdings Securities, Inc., A Registered Broker/Dealer and Investment Advisor, member FINRA/SIPC. Rose Street Advisors is independently owned and operated. Rose Street Advisors is a member firm of M Financial Group. #6610057.1

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