When Good Structures Break Down
Trust structures often promise stability, yet disputes reveal their fragility. A Self-Administered Family Office (SAFO) offers a stronger model for preserving wealth and peace across generations.
Trusts have long been promoted as the default mechanism for families seeking to preserve wealth across generations. The promise is simple: continuity, protection, and professional oversight. Yet when examined closely, especially under the pressure of intergenerational dynamics and expanding asset classes that promise frequently falls apart. Increasingly, the same structures intended to maintain harmony are found at the centre of high-cost legal battles, deep family fractures, and irreversible reputational damage.
One striking example occurred in Texas, where a $5 million trust devolved into a years-long dispute. Trustees were accused of misusing funds for personal enrichment and failing to consult or inform beneficiaries on key investment decisions. A trust established to promote long-term stability ended up not only draining capital through legal costs but permanently damaging relationships between siblings and heirs. This isn’t an isolated case, it’s emblematic of a broader structural issue. The failure lies not in the concept of stewardship, but in the outdated mechanism through which that stewardship is executed.
The problem with many trusts is that they centralise decision-making in a handful of individuals often without requiring clear communication or accountability. Trustees may be family members, external professionals, or a mix of both, but even with the best intentions, the absence of visible governance mechanisms tends to fuel suspicion. Decisions are made behind closed doors. Distributions arrive, or don’t, without explanation. And once beneficiaries begin to sense a lack of fairness or visibility, the emotional climate shifts. Trust in the trustee evaporates, and the family dynamic enters a spiral that’s difficult to arrest.
In some cases, it’s not even malfeasance that triggers breakdown, it’s opacity. I once sat in on a mediation involving three siblings disputing their late father’s discretionary trust. The conflict didn’t stem from extravagance or negligence; the trustee, a close family friend, had made conservative, rational decisions. But the siblings had no clarity on why distributions were delayed, what the investment strategy was, or even how much the trust held in reserve. That vacuum created not by misconduct but by silence caused more damage than any reckless investment ever could.
SAFO: A Structure Built for Clarity
A Self-Administered Family Office (SAFO) offers a different paradigm altogether. It retains the goals of continuity and protection but replaces ambiguity with structure. The SAFO is a corporate entity: a private holding company governed by shareholder agreements, formalised roles, and documented decisions. Instead of depending on an individual trustee’s judgment, the family governs itself within a legal framework that establishes accountability and transparency as standard.
The strength of the model lies in its flexibility. Through alphabet share classes, families can allocate control, income, and future growth strategically. Founders retain voting shares, safeguarding direction and veto rights. Growth shares can be assigned to younger generations, allowing them to benefit from future performance without diluting authority. Dividend shares give non‑active family members a stream of income, honouring their entitlement without disrupting strategic priorities. This separation of control from value is something traditional trusts cannot easily achieve.
What’s more, the SAFO is visible. Board meetings are held, minutes recorded, decisions discussed, and financial reports shared. Shareholder agreements outline voting thresholds, dividend policies, buy‑back provisions, and dispute resolution mechanisms. There’s no ambiguity about roles, rights, or expectations. That clarity doesn't just protect wealth, it protects relationships.
Anecdotally, we once advised a family that had endured two decades of tension under a discretionary trust. The patriarch had tried to ‘protect’ his children from responsibility by keeping them at arm’s length. But what they experienced was exclusion. When the family transitioned to a SAFO, everything changed. Not because the distributions became more generous, but because the children were brought into the governance process. They received reports. They attended board meetings. They saw, for the first time, how decisions were made. The tension didn’t disappear overnight, but it began to unwind. By replacing discretion with visibility, the family rebuilt something more enduring than capital: trust.
Importantly, the SAFO is not just a defensive structure it’s an investment vehicle. Unlike most trusts, which tend to hold passive assets, a SAFO can actively engage with the markets. It can invest in operating businesses, acquire real estate, hold equity stakes in venture funds, or develop digital infrastructure. It adapts. It moves. It isn’t limited to preservation; it’s designed for growth.
Tax planning becomes more effective too. Because the SAFO is a bespoke corporate entity, it can take advantage of reliefs like Substantial Shareholder Exemption (SSE) on qualifying disposals, Business Property Relief (BPR) for inheritance tax mitigation, and Capital Gains Tax planning through share class restructuring. Founders can freeze personal value while allowing growth to accrue to the next generation, creating intergenerational continuity without sudden power transfers.
Another significant benefit lies in its ability to align capital with mission. Families are no longer asking, “How do we make the most money?” but rather, “What do we want our money to achieve?” Whether that means backing climate tech, investing in healthcare innovation, or supporting social impact ventures, a SAFO enables these decisions to be enshrined at board level. It’s not philanthropy; it’s strategic legacy.
A Global Shift Toward Institutional Thinking
The shift towards institutional thinking is becoming more urgent. The headlines aren’t subtle. From the San Antonio trust case to Wall Street Journal reports showing more than half of ultra-wealthy families still lack formal succession plans, the traditional structures are cracking under modern pressures. Meanwhile, jurisdictions like Singapore are actively streamlining family office regulations to encourage formation. Governments recognise what some families have not yet internalised: informal structures are vulnerable. Durable wealth needs a durable framework.
The generational transition only adds to this. Millennials and Gen Z heirs are more mobile, more digital, and more discerning than previous cohorts. They are less loyal to banks or advisors and more sensitive to values and governance. They don’t want blind trust they want clear roles, actionable insight, and a seat at the table.
In practice, the SAFO meets that expectation. It provides continuity when personal relationships with advisors fade. It codifies governance, reducing dependence on individual personalities. It gives the family a central institution that can survive death, relocation, and generational change.
Wealth is not merely a sum of assets it is the architecture that protects, distributes, and regenerates that capital across time. Trusts, while historically valuable, have become brittle under modern demands. The SAFO offers something stronger: a structure that clarifies, includes, adapts, and endures.
