quiz 3

What is typically the largest annual cost component of a family office?

• Technology licensing

• Office rent

• Staff compensation and benefits

• Legal fees

What is a key legal risk if a family office charges an offshore trust below market rate for services?

• VAT recovery is reduced

• It may constitute a tainted settlement

• The trust loses protected status

• The trust becomes liable for FCA regulation

What technological issue is increasingly challenging for family offices?

• Automating real estate management

• Data aggregation and reporting

• Social media presence

• Creating NFT-based portfolios

Which risk is most commonly cited in family offices’ operational risk management frameworks?

• Political instability

• Cybersecurity

• Legal liability from foundations

• Exchange rate fluctuations

How are Multi-Family Offices (MFOs) typically funded?

• Family equity injections

• Rental income

• Fees from third parties

• Public offerings

What is a recommended response to the increasing use of technology in family offices?

• Limit digitization to protect privacy

• Hire talent with data analytics expertise

• Avoid using cloud-based systems

• Focus exclusively on external advisors

What distinguishes a principal-directed governance model in a family office?

What is a best practice for preparing for tax audits in a family office?

• Avoid documenting internal transactions

• Outsource all accounting functions

• Conduct audit readiness assessments periodically

• Delegate audit responsibility to legal counsel

Why might a family office opt for an LLP structure?

• To qualify for charitable status

• To avoid all taxation

• To allow member remuneration without employer’s NICs

• To limit the need for governance

What is one major cost-driver in more complex family office investment strategies?

• Reliance on passive ETFs

• Outsourcing accounting

• Layered fund-of-funds structures

• Cybersecurity tools