Anyone who has access to the internet will know the Kardashians; they are amongst that rare elite of celebrities who are famous mainly for being famous. The extended family are entertainers, musicians, sports personalities, lawyers… and the perfect example for anyone seeking to understand the value of a family office to a high net worth family.
Yes, really. The Kardashians are a large family spread over three generations, consisting of Kim, Kourtney, and Khloé Kardashian; Kris and Caitlyn Jenner; their half-sisters Kendall and Kylie Jenner; and brother Rob Kardashian. Each family member has their own business lines, ventures, reality spin off shows, modelling contracts, and public appearances to name but a few of their interests, as well as numerous members of staff to look after both their personal and business affairs. Their wealth is as complex as it is considerable.
This is typical of family office clients, even if the Kardashians are otherwise anything but typical. They live in a varied, busy, entrepreneurial, and sometimes chaotic world, where attempting to balance family relationships and business can be complex and disordered. With many high net worth families now turning to family offices to provide a confidential point of coordination for family affairs, succession planning, and control challenges, it is interesting to consider how a family office structure can benefit large families like the Kardashians. Indeed, they probably already have such a structure, so let’s use them as a case study: you might call it the Kardashian Kase.
Wealth preservation is a primary objective of any family office. Families will generally be seeking to maintain their current net worth by taking a rounded approach to risk management, asset protection, and cross jurisdictional structuring.
The Kardashians have successfully established themselves in the business world and have amassed a large amount of wealth along the way. They will undoubtedly wish to preserve this level of success and determine a way to sustain their family legacy and prevent the erosion that might begin to eat away at their fortune in the fickle world of celebrity personalities.
High net worth families will suffer many challenges when seeking to preserve their wealth. Due to the constantly evolving network of international regulations and tax laws, they face a vast, complex, and sometimes difficult environment. With a family like the Kardashians it is extremely unlikely that they will find sufficient time during their days of posing on magazine covers and red carpet events to read up on the proposed non-domicile consultation papers and tax changes in the UK! In order to achieve wealth preservation, a coordinated and organised central advisory role is required. This is where the family office comes into play.
A family office can provide relevant asset protection through the use of sensible (and compliant) structuring of legal entities and by ensuring that international changes and markets continue to be monitored so that those structures remain effective and beneficial. Good planning can successfully mitigate any possibility of future risks by protecting against creditors, divorce proceedings, and in some cases even the family members themselves. A good family office will develop an in-depth understanding of the family dynamics and relationships and this on-going communication will ensure that wealth is sustained not only in the short term but also for the family’s future generations, like Saint West.
Every family is unique and as such no two family offices will be structured the same. This is due to differences in families’ priorities. Each family will have different philosophies, values, needs, and circumstances and often a reflection of this is required within the structure to take into account estate planning, family leadership, and fairness. The goal of family governance is to establish a sustainable structure for business and wealth that will define how the wealth is managed and maintained.
This may be a complex issue for large modern families such as the Kardashians. The more family members become involved in the family businesses the more likely it is that there will be a difference in option and therefore a lack of consensus. Each member of the Kardashian-Jenner family will have their own separate needs and values for governance of family wealth. Kim and Kourtney have young families and it is likely their priorities and needs will differ to those of Kendal and Kylie Jenner, who are much younger.
This is usually achieved by family offices working closely with the family to develop a constitution which addresses the basic principles of the family’s policies and views. This should be carefully integrated into the family office structure; doing so properly will minimise the disputes that wealth can otherwise bring to a family.
The Kardashians’ fame has been so successful that one of the biggest issues they may face is dealing with the next generation. It is clear that Kim and Kourtney’s children are growing up in front of the public eye and will likely be encouraged to generate the same skills and entrepreneurial mind-set that has driven the family to generate the success they have now amassed.
A primary focus of many family offices is ensuring that the children of the family have the best possible education and guidance throughout this time. It is essential that families don’t bury their head in the sand when it comes to the long term plans of family businesses, wealth, and wellbeing. A great family office service will help the next generation slowly assume greater responsibility for wealth planning and maintenance, supported by a suitable network of highly qualified advisors. This is presuming that all members wish to play their part in the family business; if this is not the case this should be addressed too and roles outside of the family business considered to make the best use of the next generation’s talents.
Luxury Asset Administration
It’s no secret that the Kardashians have access to a luxury asset or two. Their daily use of private jets, weeks spent on vacation aboard luxury yachts in the Mediterranean, and the fleet of prestige and vintage cars they drive on a day to day basis make it clear that luxury assets are part of their first class lifestyle. A reputable family office will be able to offer assistance and years of experience in the establishment, purchase, registering, and ownership of luxury assets such as yachts, aircraft, helicopters, antiques, artwork, jewellery, cars, and other personal property.
Why? Because it can be extremely difficult to manage luxury assets. The daily administration consists of contracts, agreements, financing, tax and VAT issues, staffing, and a dozen other variables – these require impeccable organisation and careful coordination. A family office will merge any asset owning entities into an existing family office structure and provide the pivotal point of contact for day to day issues, leaving the family to enjoy and make the most out of owning those assets.
Philanthropy and Other Services
Finally, modern families are now seeking more than just administrative and advisory roles from their family offices. One of these additional areas is philanthropy. Many wealthy individuals quite rightly turn their attention towards how they can use their wealth to effectively change and develop areas close to their hearts. Kim, for example, is known to feel strongly about giving 10% of her income to a variety of charities and causes.
Charity can form part of a family’s legacy and family offices are now often required to provide advice on the most appropriate and beneficial ways to structure and implement a family charitable foundation, to maximise the impact of their giving.
Additionally, with the growth of family offices there has been a need and requirement to expand to the provision of additional services over and above the general asset holding entities, administration, and accountancy services. Family offices are now providing additional roles to support the family, including concierge services, personal tax and estate planning, banking, legal advice, and management services for family homes.
Clearly, family offices become intimately entwined with the family’s needs and desires. As such, choosing a provider would be a difficult first step. Here, I think heritage matters; there are some Multi Family Offices, such as Boston, that began as a single family office established to assist a founding family. Boston has since grown to a Multi Family Office and we maintain our deeply rooted practice of family wealth management. These family offices can provide truly impartial advice to clients and facilitate bespoke solutions to create a single confidential point of coordination for family affairs.
What we can take from the Kardashian Kase is that the whole value of a family office, as opposed to a disparate network of financial service providers, is carefully matching solutions to needs. There is no standard arrangement with family offices, just as there is no standard family: everything is personal.