The Family Office Lexicon

This lexicon is meant to be used, not read cover to cover. Jump to the theme you need from the contents above. Definitions are deliberately plain: the point is to make the language of private capital legible, not to sound sophisticated. Where a term deserves its own guide, we link to it.

Types of family office

Family office. A private organisation that manages the capital, structures and affairs of a wealthy family in one coordinated place, instead of leaving them scattered across banks and advisers. Its real job is continuity: preserving and compounding wealth, and the family behind it, across generations. See What is a family office.

Single-family office (SFO). A dedicated organisation serving exactly one family. It offers the most control, privacy and customisation, and the highest fixed cost. Usually justified once investable assets run into the hundreds of millions.

Multi-family office (MFO). A firm that serves several unrelated families on a shared platform, spreading the cost of talent, systems and access. More affordable and often more institutional than an SFO, at the price of less exclusivity and alignment. See Single vs multi family office.

Virtual family office (VFO). A lightweight, technology-enabled model with little or no in-house staff. The family retains a small coordinating core and outsources investment, tax, legal and reporting to external specialists. Flexible and low-cost, at the price of depth and control. See The Virtual Family Office.

Embedded family office. A set of family office functions run inside the family's operating business rather than as a separate entity, often by existing company staff. Efficient early on, but it blurs the line between business and family and can strain both. Sometimes called a corner office.

Outsourced family office. A model where most functions are delegated to a provider or a network of providers, with the family coordinating rather than employing. The boundary with a virtual office and a multi-family office is fuzzy in practice.

Hybrid family office. A deliberate mix: some functions kept in-house for control (often investments and governance), others outsourced for cost or expertise. Most real family offices are hybrids.

Professional or commercial multi-family office. An MFO run as a for-profit business serving clients, as opposed to a private MFO created by a few families to share their own costs. The distinction matters for incentives and conflicts.

Specialist family offices. Offices organised around how the family made or manages its money: a real-estate family office focused on property, a direct-investment family office built to source and run private deals, or an active-trader family office running an institutional markets operation.

Family office as a service. Packaged provision of family office functions (reporting, administration, investment operations) by a vendor, typically to smaller families or new offices that are not ready to build their own.

The family and its governance

Family governance. The system of rules, forums and agreements through which a family makes decisions about shared capital and resolves disagreement over time. Most structures fail on governance, not on investment selection. See Family governance explained.

Family constitution. A written, usually non-binding document that captures the family's mission, values and decision rules, and turns them into workable processes for the office, the business, trusts and philanthropy. It aligns generations and pre-empts disputes.

Family charter. Often used interchangeably with the constitution. In practice a charter tends to state purpose and values, while a constitution adds fuller structure for governance, ownership, participation and dispute resolution.

Family council. An elected or appointed body that represents the family in governance, much like a board represents shareholders. It sets direction, oversees the office and business interests, and carries the family's voice.

Family assembly. A wider gathering of the whole family, across branches and generations, that keeps everyone informed and aligned as participation grows. The council is the working body; the assembly is the community.

Family office board. The governing board of the office itself, distinct from the family council. It supervises management, sets policy and holds executives accountable.

Investment committee. The body that owns investment decisions within agreed limits: approving allocations, managers and large positions against the policy the family has set.

Investment policy statement (IPS). The formal written mandate for the capital: objectives, return and risk targets, allocation ranges, liquidity needs and constraints. It turns intentions into guardrails.

Next generation, or rising generation. The family members who will inherit ownership and, in some cases, control. Preparing them through education and involvement is treated as an asset class in its own right, because unprepared heirs are a common way fortunes end.

Family employment policy. Agreed rules for whether and how family members may work in the business or office: qualifications, entry standards, compensation and reporting lines. It prevents entitlement from corroding merit.

Conflict resolution mechanism. A pre-agreed path for handling disputes over money, succession or values: escalation steps, an independent mediator, and clear rules on when a decision needs unanimity rather than a majority.

Family bank. An internal facility, formal or informal, through which the family lends to or invests in members' ventures, education or homes, on agreed terms, rather than making unstructured gifts.

Governance handbook. The living manual that collects the constitution, charters and policies into one reference, so the system survives the people who wrote it.

Legal vehicles and structures

Trust. A legal arrangement in which a settlor transfers assets to a trustee, who holds and manages them for beneficiaries under the terms of a trust deed. A cornerstone of common-law wealth planning, valued for control, protection and succession.

Settlor, trustee, beneficiary. The three roles in a trust: the settlor creates it and funds it, the trustee holds legal title and administers it under fiduciary duty, and the beneficiaries hold the economic interest.

Discretionary trust. A trust in which the trustee decides how and when to distribute to beneficiaries, rather than fixed entitlements. It offers flexibility and protection but concentrates power in the trustee.

Protector. A person or committee appointed to oversee the trustee, with powers such as replacing the trustee or vetoing certain decisions. A check on trustee power, often used to keep the family close to control.

Foundation. A civil-law vehicle that owns assets in its own name for a defined purpose, governed by a council, without shareholders. Functionally similar to a trust for families who prefer a corporate-like structure. Common in the UAE, Liechtenstein and elsewhere.

Private trust company (PTC). A company created to act as trustee of the family's own trusts, rather than using an external trustee. It keeps trusteeship close to the family while still meeting fiduciary standards.

Holding company (holdco). A company that owns stakes in other companies and assets rather than operating a business itself, used to consolidate ownership, control and succession under one roof. See Holding companies explained.

Special purpose vehicle (SPV). A company or partnership created for a single, defined purpose, typically to hold one investment or ring-fence one risk from everything else. The building block of most deal structures.

Limited partnership (LP). A fund or investment structure with a general partner that manages and bears unlimited liability, and limited partners who provide capital with liability capped at what they commit. The standard vehicle for private funds and club deals.

General partner and limited partner. In a fund, the general partner (GP) runs the strategy and makes decisions; the limited partners (LPs) supply the capital. Family offices are usually LPs, and increasingly co-investors alongside the GP.

Dual-class shares. A share structure that separates economic ownership from voting control, letting a family distribute value across heirs while keeping control concentrated. A common defence against control fragmenting over generations.

Shareholders' agreement. A private contract among owners setting out how a company is governed: voting, transfer restrictions, exit rights and dispute resolution. Where much of the real governance of a family holding actually lives.

Private placement life insurance (PPLI). A life-insurance wrapper used to hold investments in a tax-efficient, compliant structure in some jurisdictions. Powerful and specialist, and easy to misuse; it demands genuine expertise.

Ring-fencing. Isolating an asset or a risk inside its own structure so that trouble in one part of the family's holdings cannot reach the rest. The reason SPVs and multiple entities exist.

Trusts in depth

Trust deed. The document that creates a trust and sets its terms: who benefits, what the trustee may do, and how the trust ends. The constitution of the trust itself.

Revocable and irrevocable trust. A revocable trust can be changed or undone by the settlor, offering flexibility but little protection; an irrevocable trust cannot, trading control for stronger asset protection and tax and succession benefits.

Fixed and discretionary interests. A fixed interest gives a beneficiary a defined entitlement; a discretionary interest leaves it to the trustee to decide who receives what and when. Most family trusts are discretionary, for flexibility and protection.

Dynasty trust. A trust designed to hold wealth for many generations, in jurisdictions that allow it, minimising transfer taxes at each generation. The classic vehicle for building lasting family capital.

Asset-protection trust. A trust structured, often offshore, to place assets beyond the easy reach of future creditors and claims, within the limits of the law. Protection, not concealment.

Spendthrift provision. A clause that stops a beneficiary from pledging or selling their interest, and shields it from their creditors. A guard against heirs undoing the plan.

Purpose trust. A trust created for a defined purpose rather than for named beneficiaries, sometimes used to hold the shares of a private trust company or a family business.

Offshore and onshore trust. An offshore trust sits in a jurisdiction chosen for its trust law, tax treatment or protection; an onshore trust sits in the family's home system. The choice trades familiarity against advantage.

Letter of wishes. A private, non-binding note from the settlor guiding the trustee's discretion. It keeps the family's intent alive without hard-coding it into the deed.

Rule against perpetuities. The old limit on how long a trust may last, now relaxed or abolished in the jurisdictions that court dynasty trusts. Why some places attract multi-generational structures.

Decanting. Moving assets from an old trust into a new one with better terms, where the law allows. A way to fix a trust that no longer fits.

People and roles

Family office CEO. The executive who runs the office day to day, translating the family's intent into an operating organisation, and shielding the family from complexity. Often the most important hire the family makes.

Chief investment officer (CIO). The person accountable for the investment strategy: allocation, manager selection, direct deals and risk, within the mandate set by the family and committee.

Chief financial officer (CFO). The person responsible for the office's finances, reporting, cash and controls. Smaller offices use an outsourced or fractional CFO, a part-time expert who provides oversight without a full-time hire.

General counsel. The office's senior lawyer, covering structuring, contracts, disputes, regulation and confidentiality. In a cross-border family, rarely optional for long.

Controller. The person who owns the books: bookkeeping, consolidation, the general ledger and the accuracy of what the family is told about its own position.

Registered investment adviser (RIA). A regulated, fiduciary firm or professional that gives investment advice, typically for a fee, and is registered with a securities regulator. One common external partner for a family's capital.

Fiduciary. A person or entity legally bound to act in another's best interest, ahead of their own. The single most important word to check when hiring anyone near the money.

Key-person risk. The danger that an office or investment depends too heavily on one individual, whose departure or death would damage it. Good governance is partly a plan for losing your best people.

Investing and capital allocation

Asset allocation. The division of capital across asset classes and geographies, which drives most of the long-term result. Strategic asset allocation sets the long-run mix; tactical asset allocation makes shorter-term tilts around it.

Diversification. Spreading capital so that no single asset, manager or country can do fatal damage. It builds no fortunes; it protects them.

Concentration risk. The risk of loss from too large a position in one asset, sector or market. The thing that makes fortunes, and the thing that ends them.

Direct investing. Investing straight into a company or asset rather than through a fund, to gain control and avoid fund fees. Around seven in ten family offices now do at least one direct deal a year, and most do them alongside others rather than alone.

Co-investment. Investing directly in a deal alongside a fund manager, usually with reduced or no fees. It has become table stakes: many families now expect co-invest rights as a condition of committing to a fund.

Club deal. A direct investment made by a small group of families or investors together, sharing sourcing, diligence and risk. A way to get direct-deal economics with fund-level scrutiny.

Private equity, venture capital, growth equity, buyout. Forms of investing in private companies: venture backs early-stage companies, growth equity funds scaling ones, and buyouts acquire mature ones, often with debt. Private equity is the umbrella term.

Private credit. Lending to companies outside the banking system, now a core allocation rather than a niche. Families favour senior direct lending, and increasingly asset-based lending, mezzanine and specialist strategies such as litigation finance.

NAV lending. Borrowing against the net asset value of a portfolio to create liquidity without selling. A liquidity tool, and, when overused across the industry, a source of hidden risk.

Secondaries. Buying existing fund stakes from other investors, often at a discount to stated value. Families use them offensively to buy proven assets without the early drag of new funds.

Continuation fund, or continuation vehicle. A structure a manager uses to move one or more portfolio assets into a new fund, giving existing investors an exit while retaining the best assets. Central to how private markets now create liquidity.

GP stakes. Buying a minority equity interest in the management company of a fund manager, to share in its long-term profits and secure preferential access to deals. A way large families blur the line between investor and owner.

Fund of funds. A fund that invests in other funds, offering diversification and access at the cost of a second layer of fees. Useful for reach, expensive for returns.

Evergreen, semi-liquid and open-ended funds. Funds without a fixed end date that allow periodic subscriptions and redemptions, unlike traditional closed-end funds. They widen access to private markets, but their liquidity is limited and their valuations are subjective. Interval funds are a common form; ELTIFs in Europe and LTAFs in the UK are regulated versions.

Drawdown, or closed-end fund. The traditional private-fund model: investors commit capital, it is called over time, invested, and returned as assets are sold, then the fund winds down.

J-curve. The typical early dip in a private fund's returns, as fees and immature investments weigh before value is realised. The reason patience is priced in.

Capital call and distribution. A capital call is a manager's request for committed money when needed; a distribution is cash returned to investors. Managing the gap between the two is a real family-office discipline.

Carried interest and the hurdle rate. Carried interest is the share of profits (classically twenty percent) a manager keeps above a threshold return, the hurdle rate, on top of a management fee (classically two percent). Together, "two and twenty".

IRR, MOIC, DPI, TVPI. The standard measures of private returns: internal rate of return (time-weighted return), multiple on invested capital, distributions to paid-in (cash actually returned), and total value to paid-in (realised plus paper value).

Patient capital. Money invested with the understanding that returns may take years, freed from the pressure to show quick results. The structural advantage families have over most institutions.

Permanent capital. Capital with no obligation to be returned on a schedule, which lets an owner hold through bad years and avoid forced sales. The deepest edge in long-term investing.

Illiquidity premium. The extra expected return for accepting that you cannot easily sell. Families are unusually able to earn it, because they can afford to wait.

Independent sponsor. A dealmaker who sources and structures an investment first and raises the capital deal by deal, rather than from a standing fund. An increasingly common way families access direct deals.

Digital and crypto assets

Digital assets. Bitcoin, other cryptocurrencies and tokens held as an investable asset class, now a small but increasingly standard allocation, typically one to seven percent, for many family offices.

Bitcoin as digital gold. The thesis that Bitcoin is a scarce, non-sovereign store of value and inflation hedge, which is how most conservative families frame a first allocation.

Spot Bitcoin ETF. An exchange-traded fund holding Bitcoin directly, approved in the United States in 2024. The route most families use for exposure without holding coins themselves, keeping custody simple and liquid.

Qualified custody. Holding digital assets with a regulated, insured institutional custodian rather than in self-custody. The standard for serious allocations, alongside bankruptcy-remote structures.

Cold and hot wallets. A cold wallet is kept offline for security; a hot wallet is connected to the internet for access and trading. The core trade-off in crypto custody is safety against convenience.

Multi-signature and MPC. Multi-signature requires several approvals to move assets; multi-party computation (MPC) splits the signing key so no single person holds it. Both remove the single point of failure that ends most crypto losses.

Stablecoins. Tokens designed to hold a steady value, usually pegged to the dollar, used for fast, cheap cross-border movement and settlement. Increasingly a treasury and payments tool rather than a speculation.

Tokenisation and real-world assets (RWA). Representing an asset, a Treasury bill, a fund, a building, as a token on a blockchain, to make it easier to hold, divide and settle. Tokenised Treasuries are the fastest-growing institutional use.

Staking. Earning yield by committing crypto to help secure a blockchain network. A source of return, and of technical and regulatory risk that needs real understanding.

DeFi. Decentralised finance: lending, trading and yield through blockchain protocols rather than institutions. High potential and high risk; families engage mainly through regulated products.

MiCA and CARF. Europe's Markets in Crypto-Assets regulation, which sets institutional standards for custody and disclosure, and the Crypto-Asset Reporting Framework, which brings crypto into automatic tax reporting. The rules that made the asset class investable for fiduciaries.

Forks and airdrops. A fork is a split in a blockchain that can create new coins; an airdrop is a distribution of tokens to existing holders. Small operational events that custody and governance must actually plan for.

Passion, trophy and lifestyle assets

Passion assets. Things a family owns for enjoyment and identity as much as return: art, cars, wine, watches, jets and yachts. Real capital, with their own markets, risks and running costs.

Trophy assets. Rare, iconic holdings, a landmark building, a blue-chip painting, a champion racehorse, valued as much for prestige and permanence as for yield. Often illiquid and emotionally held, which makes them hard to govern.

Blue-chip art. Works by established, market-proven artists, treated as a store of value and a diversifier. Priced through provenance, condition and auction record rather than cash flow.

Provenance. The documented ownership history of an artwork or collectible, which underpins its authenticity, legality and value. The paperwork that makes the asset an asset.

Freeport. A high-security, tax-advantaged storage facility, in places such as Geneva or Luxembourg, where art and valuables can be held, and sometimes traded, in bond. Convenient, and under growing transparency scrutiny.

Fractional ownership. Owning a share of a high-value asset, a jet, a yacht, a painting, rather than the whole, to spread cost and access. Common in aviation and, increasingly, in art.

Private aviation. Owning or accessing private aircraft through full ownership, fractional programmes or jet cards. A lifestyle asset with heavy running costs, complex ownership and its own regulation.

Yachts and classic cars. Prestige assets with strong collector markets, real maintenance burdens and, occasionally, genuine appreciation. Usually held through dedicated companies for liability and succession.

Collectibles. Watches, wine, rare whisky, jewellery and memorabilia held as tangible, portable stores of value. Small on a balance sheet, but often large in a family's identity.

Wealth, tax and jurisdiction

UHNW and HNW. High-net-worth and ultra-high-net-worth. Ultra typically means investable assets above roughly thirty to fifty million dollars, the level at which a dedicated structure starts to make sense.

Wealth preservation. Protecting the real value of capital across generations, cycles and shocks, treated as the primary mandate. The objective that endures is not maximising return; it is not being forced to sell.

Estate planning. Arranging ownership, structures and instruments so that wealth passes to the next generation with minimal loss, dispute and tax. The plumbing of succession.

Succession planning. The broader preparation for passing both ownership and stewardship to the next generation, through structures, education and clear criteria, rather than a single handover.

Forced heirship. Rules in some jurisdictions that reserve fixed shares of an estate for certain heirs, limiting how freely wealth can be directed. A key reason jurisdiction and structure are chosen with care.

Estate, inheritance and gift tax. Taxes on transferring wealth at death or by gift, which can do the most damage to a fortune across a generation. Often the decisive factor in where and how a family structures.

Domicile and residence. Two distinct legal ideas that determine tax exposure: residence is broadly where you live now, domicile is a deeper, longer-term legal home. The gap between them is where much international tax planning happens.

Non-domiciled status. A regime, now abolished or curtailed in some countries, that taxed residents differently on foreign income depending on domicile. Its recent unwinding has driven real movement of families.

Lump-sum taxation. A regime, such as the Swiss forfait or Italy's flat tax on foreign income, that taxes qualifying newcomers on a fixed basis rather than worldwide income. A common draw for relocating families.

Substance. The genuine local presence, staff, premises and decision-making, that a structure needs to be respected for tax and regulation. Increasingly, the price of the tax treatment is real substance.

Common Reporting Standard (CRS) and FATCA. International frameworks for the automatic exchange of financial-account information between tax authorities. The reason meaningful secrecy is largely gone, and compliance is not optional.

Onshore, offshore and free zones. Loose terms for where a structure sits relative to a family's home country and its tax and regulatory regime. Financial centres such as the DIFC and ADGM in the UAE are common family-office hubs; a Qualifying Free Zone Person can access preferential tax treatment where conditions are met.

Jurisdiction as an allocation. The recognition that where assets are held is itself a decision that allocates legal, tax and political risk, not an administrative afterthought. See Where should a family office live.

Citizenship, residency and mobility

Investment migration. Acquiring residency or citizenship rights through qualifying investment, used by families to secure mobility, safety and options. A market redrawn sharply between 2024 and 2026 as programmes closed, repriced or moved away from real estate.

Citizenship by investment (CBI). Acquiring a country's nationality, and passport, through a qualifying contribution or investment, often without a residence requirement. Caribbean programmes are the best known, now sharing a two-hundred-thousand-dollar minimum.

Residency by investment (RBI), or golden visa. Acquiring the right to live in a country through investment, distinct from citizenship. Europe's golden visas grant Schengen access; many have shifted from property toward funds and productive capital.

Second passport. An additional nationality held for mobility, safety and optionality. For many families it is insurance: a way never to depend on a single government's future decisions.

Golden visa, passport and tax residency. Three things people confuse and that rarely point to the same country. A golden visa is a residence right; a passport is citizenship; tax residency is where you are actually taxed, and only physical relocation changes it.

Sovereignty optionality. The freedom, bought through mobility rights, to change where the family and its capital are based if a jurisdiction turns hostile. The deeper reason serious families invest in second residencies.

Backup jurisdiction, or plan B. A pre-arranged place, with residence, banking and structure already in hand, that the family can move to quickly if it must. Preparation, not paranoia.

Compliance, risk and reporting

Anti-money-laundering (AML) and know-your-customer (KYC). The checks that banks and providers run to verify who they are dealing with and the source of funds. For a cross-border family, smooth AML and KYC is a practical form of freedom; friction here quietly blocks accounts and deals.

Sanctions screening. Checking counterparties and holdings against sanctions lists. A non-negotiable control, and a growing source of risk as regimes shift.

Custody and the custodian. Where assets are legally held for safekeeping, and the institution that holds them. Custody arrangements determine who actually controls the assets and how they are protected.

Consolidated reporting. Bringing every account, entity and asset class into one accurate picture of what the family owns, owes and earns. Deceptively hard, and the foundation of every good decision.

General ledger. The complete accounting record behind consolidated reporting. Unglamorous, and the difference between knowing your position and guessing it.

Benchmark and GIPS. A benchmark is the yardstick a portfolio is measured against; the Global Investment Performance Standards are a discipline for reporting returns honestly and comparably.

Risk management. The practice of identifying and containing what could do serious damage: concentration, liquidity, counterparty, currency, cyber and reputational risk. For a family, the point is survival, not the elimination of every risk.

Counterparty and liquidity risk. Counterparty risk is the chance the other side of a deal fails to perform; liquidity risk is the chance you cannot sell when you need to. Two of the quiet ways balance sheets break.

Cybersecurity and reputational risk. The exposure of a private, wealthy family to digital attack and to public damage. Both are now core risks, not afterthoughts, because reputation takes decades to build and an afternoon to lose.

ESG and SFDR. Environmental, social and governance considerations in investing, and the European disclosure regime (SFDR) that classifies funds, with Article 9 the most stringent. Increasingly a screen families apply even without a formal mandate.

Philanthropy and legacy

Philanthropy. The structured giving of capital to purposes beyond the family, often a core part of its identity and a training ground for the next generation.

Private or charitable foundation. A dedicated legal vehicle for a family's giving, with its own governance and, in many places, tax advantages, in exchange for rules on how it must distribute.

Donor-advised fund (DAF). A simpler giving vehicle held at a sponsoring organisation, where the family recommends grants over time. Lighter and cheaper than a foundation, with less control.

Endowment. A pool of capital invested to fund a purpose in perpetuity from its returns, spending the yield while preserving the principal. The model many long-term families borrow from.

Impact investing. Investing for measurable social or environmental results alongside a financial return, rather than giving money away. Includes mission-related and program-related investments made from philanthropic capital.

Legacy and stewardship. Legacy is what the family intends to leave, financial and otherwise; stewardship is the idea that each generation holds the capital in trust for the next rather than owning it outright. The frame that separates families who endure from those who merely spend.