Joseph Milano, a Managing Partner at New South Wealth Management, discusses the concept of being “ultrarich” and how this label applies to over 28,000 people worldwide with at least $100 million in investable assets. He highlights the sources of wealth for centimillionaires, which include inheritance, the sale of businesses, stock market trading, and leading multinational tech companies. Milano emphasizes the importance of strategic financial management to navigate sudden changes in financial status, whether through selling a business or receiving a windfall inheritance.
Family offices play a crucial role in managing the wealth of centimillionaires, serving as protectors of their assets and ensuring that safeguards are in place. These offices, which can be single-family or multifamily, handle a wide range of financial, legal, and tax-related matters. Milano discusses key factors for family offices to review, including legal entity structure, compliance with regulations, and tax planning strategies. He stresses the importance of staying abreast of changing tax laws and regulations to maximize tax advantages and ensure compliance.
Milano points out that family offices operate like businesses, requiring careful consideration of legal entities and compliance with regulations such as the Dodd-Frank Act. He warns that failure to properly handle family matters within the office can lead to legal issues, such as violations of ERISA provisions or noncompliance with SEC reporting requirements. Family offices must also stay updated on changes in tax laws, such as increases in the gift tax exclusion, to maximize tax advantages and ensure compliance with government regulations.
With great wealth comes responsibility, and family offices play a crucial role in helping centimillionaires maintain their financial legacy, structure asset succession, and establish a culture around their wealth. Milano emphasizes the importance of working with a professional team to establish or overhaul a family office to ensure that financial status remains in line with the values and goals of the family. He concludes by emphasizing the importance of consulting with licensed professionals for personalized financial advice tailored to individual situations.
