What Annual Tax Preparation is Necessary for HNWI?

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Annual tax preparation for high-net-worth and ultra-high-net-worth individuals can be complicated.

Their intricate financial holdings require not only a significant attention to detail, but a deep understanding of the nuances related to their finances.

In this article, we review some of the key factors at play when these wealthy individuals and their CPAs plan their annual tax filings, and what our role is in this important process.

Income

One of the biggest elements related to tax preparation for high-net-worth individuals is their income. HNWI often have multiple sources of income, including but not limited to:

  • Salaries and bonuses
  • Dividends
  • Rental income
  • Capital gains
  • Business income

We delve into greater detail on some of these income types below, and they impact annual tax preparation.

Investments

Many high-net-worth individuals have investment portfolios and brokerage accounts. Not only are these types of investments complex to manage and track, but they can also influence the timing of when tax returns can be filed.

Private Equity Investments

These investments play a big role as far as how timely tax returns can be filed. Those who invest heavily in private equity will invariably need to file an extension because K-1’s, which list taxable income related to certain business entities, are often not received until summertime. This late-in-the-year receipt of the document makes it nearly impossible to file taxes on time.

Brokerage Accounts

The number of brokerage accounts dictates the interest and dividend income of the client. It is essential to have the proper process in place to collect this information and be able to tie it out to the tax documents before being submitted to a CPA. We’re proud of the process we have created to ensure that we are able to do this accurately and on time.

Real Estate

Many of our HNW clients own investment or rental properties, and this can be a big tax item. The income and expenses from these properties must be tracked carefully as they are reported differently on tax returns than ordinary income. As new properties are purchased or old properties are sold, it is imperative that these clients retain and provide all documents related to these changes because these documents impact the taxes owed on the gains realized.

For example, escrow statements for real estate purchases need to be sent to the CPA. When a home or property is sold, the cost basis must be documented correctly.

Business Ownership

Another type of income-generating investment that we see with our clients is business ownership. The CPA must understand the ownership structure of the new entity to ensure proper tax filing. When working with clients who own their own businesses, we’ve found managing their personal books and their business books to be a best practice. This allows us to ensure that all net profits and losses are flowing correctly from the business into their personal books. We typically provide the financial information for these entities to the CPAs who in turn roll that into the personal tax returns.

In the event that a client owns a business for which we don’t keep the books, we communicate closely with whomever does so that we have an accurate, updated record of all relevant transactions.

Charitable Contributions

Many affluent individuals make significant charitable donations. Proper documentation and reporting are crucial for these contributions to be deducted appropriately. Any donations made above $250 can be audited, so it is crucial to stay on top of these documents. We collect all charitable receipts from our clients throughout the year. We hold these receipts so we can share a complete and updated charitable contribution receipt file with the CPA to assist them with the tax filing.

Estate and Gift Tax Planning

For both types of tax planning, it’s best to work with experienced professionals. For estate planning, we encourage our clients to seek out the assistance of an estate planning attorney. For gift tax planning, a CPA can help to prepare the returns. Our role in this is to keep track of the transactions when they occur.

Foreign Reporting

For ultra-high-net-worth people with foreign bank accounts, financial assets, or income earned abroad, there is a form that needs to be filed and submitted to the IRS every April. The Foreign Bank Account Reporting form (FBAR) asks for the highest balance in the account at any given point in time for that year, as well as the ending balance at the end of that year. We provide this data to the CPA who then completes the FBAR form and submits the paperwork.

It is important to note that this form is filed separately from the income tax return, and there are no extensions permitted.

Quarterly Tax Payments

Due to their income level and type of income, high-net-worth individuals often need to make estimated tax payments throughout the year. We provide all necessary year-to-date financials to our clients’ CPA, and once the calculations have been completed by the CPA, we process the tax payments on behalf of our clients.

At the end of the day, helping high-net-worth clients prepare and plan for their annual tax filings comes down to being meticulous with maintenance of their financial documents and records, understanding the complex nature of their unique financial situations, and working with experienced accounting and tax professionals.

Plumb delivers financial peace of mind by assisting high-net-worth individuals and family offices know where their money is going, so their trusted advisors can effectively manage it. We work in partnership with their team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of their assets and financial holdings. We’d love to help answer any questions you may have. Feel free to schedule time to speak with Anneke Stender, our EVP, at your convenience.

 

 

When to Build Your Own Family Office and When to Outsource

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We often field questions about when it makes sense to create a Family Office and when these tasks can be outsourced instead.

Who Is Asking?

Many of our clients are retired CEOs who utilized their corporate financial team to help manage their personal finances. When those financial professionals are no longer available, these clients are often left concerned and uncertain about how to manage their personal finances moving forward. They are curious about the pros and cons of building their own family office.

Another common issue we see is when family members don’t agree on strategies related to wealth management and preservation, especially upon the passing of a parent or other family member. Oftentimes this results in friction and fighting, which can be exacerbated in times of stress or sadness.

Our Expert Advice.

Our first recommendation is to have a succession plan in place, so in the event of the retirement of a trusted employee, or the death of a family member, the individual or family has an agreed upon plan.

If this planning has not taken place, and the family is struggling with how to manage their bill pay and accounting needs, rather than jumping straight into building a family office, we suggest dipping their toe in the waters.

By this we mean, work first with an outsourced bill pay and accounting service provider. This will help get everything in order, and perhaps more importantly, will ensure that all bills are paid, accounts are reconciled, and documentation is retained.

Once the dust has settled, if the family still feels they prefer to build and manage their own family office, they can now do so with accurate records and a better understanding of their financial state.

We’ve also pulled together this checklist to help understand the benefits and challenges of building your own family office versus working with an outsourced family office service provider.

When to Build Your Own Family Office

ο  Customization: Building your own Family Office provides an opportunity for more personalization that is tailored to your family’s specific needs.

ο  Complex Family Structure: A diverse or intricate family structure might benefit from a dedicated office that can handle the unique needs and nuances of various family members.

ο  Family Legacy and Education: A family office can double as a hub for family governance and provide financial education for younger generations.

ο  Sufficient Resources: Building a family office requires significant capital to cover the overhead, staff salaries, technology, and infrastructure. If your family has the resources, this option might be suitable.

When to Outsource Family Office Responsibilities

ο  Cost Efficiency: Outsourcing can be cost-effective, especially for families that don’t have the substantial assets to justify the high fixed costs of an in-house office.

ο  Access to Expertise: Multi-family offices and other outsourced service providers often have teams with specialized knowledge across various areas and can provide expert advice without the need to hire a full-time in-house team.

ο  Avoiding Administrative Burden: Operating a family office can be administratively intense. Outsourcing can alleviate the operational complexities, from HR issues to IT infrastructure.

ο  Flexibility: Outsourcing can offer more flexibility, allowing the family to switch providers or adjust services as needs change.

ο  Risk Management: Established multi-family offices or outsourced providers often have more robust risk management systems and protocols in place, which can be expensive and time-consuming for a single-family office to replicate.

ο  Start Small: For families just beginning to explore the world of family offices, outsourcing can serve as a stepping stone. They can test the waters before committing to creating their own.

Plumb delivers financial peace of mind by assisting high-net-worth individuals and family offices know where their money is going, so their trusted advisors can effectively manage it. We work in partnership with their team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of their assets and financial holdings. We’d love to help answer any questions you may have. Feel free to schedule time to speak with Anneke Stender, our EVP, at your convenience.

 

 

16 Questions You Should Ask Your Outsourced Bill Pay Provider – and Our Answers

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  1. How does your Bill Pay process work?

From initial client set-up to ongoing high-touch support, we have this process down to a science.

  1. We ask the client or their designee to complete a new client questionnaire.
  2. Upon receipt of this questionnaire, we prepare a comprehensive solution-oriented proposal.
  3. Once the proposal is agreed upon and the contract is signed, we begin our seamless Onboarding process. We request a current vendor list and coordinate view only account access, where applicable. We prepare a billing tracker with all of the monthly, quarterly and annual bill pay commitments. Lastly we set-up the client/designee with access to our bill pay app and customize the invoice approval process.
  4. Once everything is set up, we begin the bill payment work which includes cash flow monitoring and comprehensive reporting. This reporting may include expense tracking, cost analysis/ variance explanations, budgeting, and forecasting.
  5. At the end of the year, we provide a Year End Summary Report and 1099/1096 filings to ensure that your CPA receives all the necessary details to incorporate the information into the annual tax filings.

If you have any specific questions, please read more about our process here.

  1. How do you keep client confidentiality?

We have full confidence in the established protocols we have implemented to safeguard the confidentiality of our clients.

We proactively protect classified data in several ways:

  • We have a customized cloud network built on unique specifications, backed on a singular data center that keeps all data stored and safe from localized data loss. This data center is certified PCI 3.0 compliant, HIPAA compliant, and SSAE-16 Type II compliant.
  • We maintain state-of-the-art bank-level security and an in-house IT department that provides constant monitoring and oversight.
  • We maintain rigorous oversight of internal client access.
  • We focus on a clear segregation of duties among our team.

We pride ourselves on our effective and all-important quality controls, security measures and confidentiality guardianship. Please let us know how we can assist you in your family office accounting or bill pay needs. We have more to share on this topic, so please see our blog posts about how we protect the confidentiality of our clients.

  1. Do your clients work with a team or an individual?

The quick answer is: both. When you work with Plumb, you have a team of experienced high-net-worth bill payment and accounting professionals at your fingertips. You will be assigned a primary contact for your day-to-day questions and needs, but that person works with an entire team of experts to help ensure not only the necessary quality controls, but also the high-touch support that is synonymous with Plumb.

  1. Do you pay client bills by check or wire?

We can pay bills by wire, ACH, or checks, and we follow the strictest of protocols to ensure that any and all payments are made securely. Please read our article with more details on this topic, including definitions of some important payment terms, here.

  1. How does the bank account set up work? Do we set up our own or under their name with a POA?

Bill pay account(s) are set up in the client’s name. The Plumb signers are then added to the account(s) as limited POAs to sign off on banking transactions, such as ACH, wires and checks.

  1. What type of reporting will they receive and frequency and can we see an example?

This depends on the scope of work. Plumb’s standard reporting package is  a monthly expense report with variance analysis.

  1. Can you help with collecting my K1s at the end of the year?

At Plumb, we can help you track and collect all of the various K-1s you are due to receive each year.  As K-1s are received, we reconcile them against the transactions in your books to ensure accuracy and work with the appropriate parties if corrections are needed.  We can then provide reconciled year-end financial statements to the CPA for finalizing tax returns. Still have questions? Please read our detailed recommendations here.

  1. What is your interaction with my CPA?

Plumb works in partnership with CPAs (as well as any other trusted advisors) to ensure all aspects of our client’s financial life work together cohesively, efficiently, and seamlessly. We act as a Controller-level point of contact between the CPA and client by delivering reliable, timely and organized reporting. We track 1099’s, K-1’s, charitable contributions, medical expenses, sales of stock and all other income, and we also handle the preliminary year-end tax work by preparing the Annual Tax Organizer. All this with the goal of being able to provide your CPA with the accurate and updated documentation they require. Please read this post about the ways in which we work with other financial advisors.

  1. Do I have to approve every invoice?

During the onboarding process we will review your goals for the management of your bill payment. We can set up your account so that you can approve certain bills, or bills over a certain amount, or even bills that are a certain percentage higher than what they typically are. Our client services are bespoke, and we can provide the assistance and support that works best for you and your lifestyle.

  1. What happens with all my bills? Do I forward them or do they come to you and how?

During the onboarding process, Plumb assists in getting delivery emails or physical addresses changed so that all invoices are coming directly to Plumb. During the onboarding/transition time, clients either forward bills to Plumb by email, send them weekly via overnight mail or upload them directly into the Bill Pay App. Generally, after 60-90 the majority of the bills are received directly by Plumb.

  1. Where is my account manager located and are they in my time zone?

Our Plumb team works remotely in the United States, across a few different time zones. If you prefer to have your main point of contact be someone in your time zone, we will make every effort to find you the best fit. However, we always tell our clients that our Plumb team is just that – a team of experts who are available to help answer questions and provide insights whether you are their direct client or not.

  1. Do you manage international accounts/handle my home in France? Or just US assets?

We have experience in handling bills related to assets outside of the US. Our recommendation is to be set up as a signer on the foreign bank account for ease of paying the bills oversees.

  1. Do you have a portal I log into to see the bills?

Absolutely. We have a proprietary bill pay app available on both web and mobile devices. Our app was designed with our HNWI clients – and their trusted advisors – in mind. It provides access and clarity to the bill payment process and makes approving bills, viewing bill payment status, and communicating with the Plumb team more accessible and easier than ever. Our intuitive and incredibly useful app is the logical evolution of our high-touch, high-tech service. If you’re interested in a demo, please reach out to Anneke to schedule time.

  1. Can advisors have view-only access to the information in the software/app?

Yes, that’s not a problem. During client onboarding we will review the details about who should have access to what, and who can issue approvals.

  1. Can my assistant or property manager approve certain invoices on my behalf?

Yes. You can select any trusted designee to approve certain invoices on your behalf. We can also set up your account so that invoices under or over certain dollar amounts are approved by different people.

  1. How do I know if more money needs to be funded in the bill pay account and how does that process work?

This can happen in a couple of different ways. The first is that your Plumb team member will let you know if your bank balance is underfunded based on the number and dollar amount of bills in queue to be paid. The second is that our bill pay app will show a bank balance snapshot on the dashboard of available funds. If upcoming obligations exceed the balance, a warning message with the shortfall amount will be displayed.

Plumb Bill Pay & Family Office Accounting is a high-touch technology bill pay and family office accounting service provider dedicated to serving the needs of high-net-worth and ultra-high-net-worth clients. Plumb ensures that your client’s bills are paid on time and works in partnership with you to deliver the highest quality data and financial reporting. In addition to our bill pay services, we also provide comprehensive Family Office Accounting support.

Let’s talk about we can help you, so you can devote more time to enjoying life.

3 Keys to Trust Accounting and Reporting

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Managing the accounting of trusts can be complex. There are a variety of ways in which trusts can be established, and the rules and regulations of trust accounting vary by state. To simplify, trust accounting is essentially the tracking and bookkeeping of cash in various accounts. Anneke Stender, the EVP of Plumb Bill Pay and Family Office Accounting, likens it to one big bank reconciliation.

  1. Background on the Basics of Trust Accounts

An account in trust (or trust account) refers to any type of financial account that is opened by an individual and managed by a designated trustee for the benefit of a third party per agreed-upon terms.

Trust assets are generally either “principal” or “income” where the principal is the assets owned by the trust, and the income is what is earned by those assets. Assets in a trust can be anything from cash, stocks, bonds, privately held companies to real estate holdings.

  1. Trust Accounting Main Concerns

It is imperative that the allocation of income versus principal is both accurate and accurately reported to maintain the integrity of the trust. The beneficiaries of the trust need to know what funds were allocated and to whom. This helps to ensure that the beneficiaries receive their fair share of the allocation, and it also reduces the risk of disputes.

To further eliminate the likelihood of arguments or disagreements over trust allocations, many trust reports will be filed by an attorney with the court.

One other challenge of Trust Accounts is that not all of them are protected from creditors. Typically, an irrevocable trust protects assets from creditors whereas a revocable living trust does not. However, the protection of an irrevocable trust varies depending on the state. It is highly recommended that you reach out to an attorney who is experienced in this field with specific questions about protections.

  1. Benefits of Trust Accounts

There are tremendous benefits to setting up Trust Accounts, and these tend to outweigh any of the downside. Among these benefits are:

  • Asset protection
  • Better control of those assets
  • An equitable division of assets among family members/beneficiaries

Another notable benefit of trust accounts is the avoidance of probate. When assets are held in trust, beneficiaries typically bypass the probate process in the event of the account holder’s death. Additionally, trusts provide a means to reduce or even eliminate substantial estate taxes. By transferring assets into trusts, individuals can effectively decrease their overall taxable estate.

Maintaining a trust is relatively straightforward for both beneficiaries and other involved parties, especially with a knowledgeable team that understands state regulations and the trust’s objectives.

As expert accountants for high-net-worth individuals and families, Plumb has decades of experience preparing the accounting for trusts. This includes:

  • Managing the books on a monthly, quarterly, and annual basis.
  • Working with the trustee in processing payments to vendors and beneficiaries.
  • Allocating income and principal funds.
  • Providing necessary reports for the attorneys, CPAs, trust beneficiaries or the court.
  • Preparation of annual court accountings

There is specialized accounting that is required for trusts, and the rules and regulations vary by state, so it is important to understand the specific requirements of your state.

For those unfamiliar with the specific accounting requirements of trusts, consulting with expert accountants and attorneys who specialize in this area is strongly advised. They can help manage the books, make accurate allocations, and provide the necessary reporting – essentially making the complex straightforward. Whether you are a beneficiary, a trustee, or someone considering setting up a trust, arming yourself with knowledge and a proficient team can help you optimize the advantages that trusts offer.

Why – and How – to Track Monthly Spending for High-Net-Worth Individuals

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There are many benefits to tracking monthly spending, regardless of your tax bracket. However, staying on top of monthly spending for high-net-worth individuals is especially important because they often have complex financial portfolios and spending patterns — which can lead to difficulties in understanding cash outflow, and where money is really going each month. Without clarity into how their money is being spent, it is more difficult to manage and preserve their wealth.

And that’s just one example of the benefits of tracking monthly spending.

Tracking expenditures for high-net-worth individuals has five main advantages:

  1. Leads to more mindful spending.

Access to monthly spending data provides a clear picture of spending habits, including both regular and irregular expenses. This information helps to identify areas where expenses can be reduced or streamlined, ultimately leading to better financial management.

  1. Identifies problem areas and where there might be overspending.

Tracking monthly spending provides a comprehensive view of one’s finances, making it

easier to create an accurate budget. This can help high-net-worth individuals allocate their funds effectively and avoid overspending in one area while underfunding in another.

  1. Assists with better planning for major expenses.

Or, put another way – helps to create a better, more accurate budget for future spending. High-net- worth individuals often have significant expenses like buying a vacation home, a yacht, artwork, or other high-value items. Tracking monthly spending can provide the information needed to plan for these major expenses, helping to ensure that there are enough funds available when the time comes.

  1. Provides increased awareness of investment opportunities.

By tracking monthly spending, high-net-worth individuals can identify areas where they have excess funds. This excess can then be invested in various opportunities that can lead to financial growth and stability.

  1. Improves cash flow management.

By keeping track of monthly spending, high-net-worth individuals can ensure that their cash flow remains positive. This helps them to avoid being caught in financial difficulties and maintain their wealth.

There are clear benefits to tracking monthly spending. But what is the best way to do so?

There are a few different ways that people can track their monthly spending, but for high-net-worth individuals we recommend outsourcing this task to experts (like us).

Why? That’s easy – it’s because we are solely focused on providing outsourced bill pay and accounting services to high-net-worth individuals and families. We’ve been dedicated to supporting these clients for decades, and we have a depth and breadth of knowledge that makes us true experts.

Outsourced bill pay service providers like Plumb offer monthly reconciliations to keep track of all transactions. Additionally, we provide easily accessible reporting to highlight the current state and future projections of cash outflow.

Plumb has also developed a proprietary bill pay app specifically designed for our clients and their financial advisors. This app streamlines the entire bill pay process and makes approving bills, viewing bill payment status, and communicating with the Plumb team easier than ever. It provides the clarity we know these clients need as well as access from anywhere, at any time we know they want.

At Plumb, we have a proven process in place for assisting our high-net-worth clients track their monthly spending:

Goal Tracking

  • We provide quantifiable information to help them meet the goals they’ve established.

Software Tool Assessment

  • We also make recommendations about the best software for them to utilize. For example, clients with multiple entities are best served by a software suite like Sage Intacct, whereas clients with more straightforward finances can use a platform like QuickBooks Online. Both are excellent tools, both can help to streamline reporting and create efficiencies, but it ultimately comes down to the clients’ specific needs.

Customized Reporting

  • When it comes to reporting, Plumb offers fully customizable reports. We provide P&L’s, expense tracking reports, cash flow statements, income statements, balance sheets, and more robust investment tracking reports offered by our Family Office Accounting team.

Supportive Services

  • We work in partnership with the wealth advisors of our clients, as well as directly with the client – whatever they prefer. Our goal is to make sure we are providing our clients with everything they want and need in their expense tracking.

Tracking monthly spending is a crucial aspect of personal finance, especially for high-net-worth individuals. With a considerable amount of wealth, monitoring how money is being spent is essential to making sure that they are on the right path towards realizing their goals and long-term wealth preservation. Outsourced bill pay and accounting service providers like Plumb are here to help ensure they have clarity into their daily finances so they can go out and enjoy what matters most to them.

How Plumb Securely Handles Wire Transfers, ACH, & Check Payments for the HNWI

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When managing the bill pay needs of high-net-worth individuals and families, it’s imperative to have bank-level security for all payments being sent – whether those are wire transfers, ACH, or old-school checks.

Plumb has the strictest of protocols to protect our clients and their money. And with our decades of experience working with HNWI, families, and family offices we have our payment security procedures down to a science.

 

First-time wire safety procedures

Any first-time wire transfer requests require verbal confirmation on a recorded line with the client or designee to confirm the transaction.

  • To authenticate the individual, they are asked a series of security questions.
  • Additionally, we reach out to the beneficiary on a recorded line to verbally confirm the written wire instructions that were provided.
  • A change to wire instructions also prompts a verbal confirmation from both the client and the vendor to reconfirm the instructions.

New vendor safety procedures

Any new vendor, an invoice with a 200% variance, or a vendor that hasn’t been paid in over a year requires a verbal with the client/designee before processing.

Employee cybersecurity training

Our team is also wholly trained in cybersecurity and participates in monthly security updates. They know what to look out for, how to spot a “scam” and what to do in the event that they suspect malintent: pick up the phone and confirm with the beneficiary, their designee, and the vendor. This step is as imperative as it is simple, and it can prevent fraud, months of headaches, loss of funds, and loss of the trust we have built with our clients. Preventing these events is of paramount importance to the Plumb team.

Is one payment option better than the other?

Although each payment option varies slightly in terms of how quickly a payment will be delivered or their associated costs (see below for more details), Plumb remains impartial when it comes to these different options.

Due to our stringent security measures and our internal system of checks and balances to ensure accuracy, payments made on behalf of clients via wire transfer, ACH, or check are all equally safe. While approximately 80% of our payments are made via wire transfer – especially those payments that are more urgent –  if a client prefers ACH over wires due to the fees incurred with wire transfers, we will always honor the client’s wish.

What’s next?

As a result of the pandemic and the improvements in bill pay technology, we have noticed a shift towards more electronic payments over the past couple of years. We don’t expect this trend to slow down any time soon. What we know for sure is that wherever the future of bill pay takes us, Plumb will be prepared with our best-in-class bill pay staff, high-touch service, and the latest security measures.

Glossary of Payment Terms

Wire Transfers

  • Speed of Payment: Same day.
  • Associated Costs: Fees can be incurred for both the sender and recipient depending on the bank. (Typically, $15-$30).
  • Safety: Funds are accessible immediately, so recipient is technically at an advantage.
  • Recourse in case of fraud: Once completed, there is no way of reversing. Internal process with the bank to handle the funds being returned (if applicable).
  • $ Limit: No limit for Plumb. (Daily limits with specified bank that can be increased as needed.)
  • Other Info: Currency rate/exchange fees can be incurred.

ACH (Automated Clearinghouse Network)

  • Speed of Payment: 1-3 business days.
  • Associated Costs: No cost.
  • Safety: More secure for the sender as funds can be reversed after funds have been sent (in most cases).
  • Recourse in case of fraud: Payments can be reversed by the bank (sender advantage).
  • $ Limit: $1MM limit.
  • Other Info: Limited to the US.

Check

  • Speed of Payment: Can take up to a week (or longer) to be delivered to a vendor.
  • Associated Costs: No cost associated with sending aside from postage fees.
  • Safety: Safe; Plumb’s policy is to send any high dollar checks, DMV payments, or tax payments via certified mail with tracking.
  • Recourse in case of fraud: Dispute and open a case with the bank.
  • $ Limit: No limit.
  • Other Info: International checks are typically sent using alternative methods like UPS or FedEx.

 

Top Ways that Plumb Bill Pay Works with Trusted Advisors

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Bringing Professional Insights to Personal Finances

At Plumb Bill Pay and Family Office Accounting, we streamline the efforts of our client’s trusted advisors to ensure that all aspects of their financial life are working together in a strategic and efficient manner.

A collaborative implementation with all our client’s professional advisors leverages their total expertise and gives everyone the backdrop to make better financial decisions and achieve goals.

Plumb Family Office Accounting works in partnership with trusted advisors to ensure the highest quality data and financial reporting is delivered to the personal financial management team.  This helps maintain a comprehensive view of family wealth and gives full visibility into the performance of their portfolio.

Plumb Family Office Accounting does not manage wealth, or do taxes, audits, tax planning or financial planning. 

 

“The month-end financial reports that Plumb Family Office Accounting provides to my clients give a clear, aggregated picture of their current financial status and helps establish wealth preservation.“ – Client’s Estate Attorney

 

How Plumb Bill Pay and Family Office Accounting Provides Value to Trusted Advisors

Wealth Manager:

  • Simplifying complex financial structures with one holistic report
  • Providing timely and accurate financial reports
  • Helping to identify red flags or financial gaps

CPA:

  • Providing a Controller-level point of contact between CPA and client
  • Ensuring reliable, timely and organized client data
  • Tracking 1099’s, K-1’s, charitable contributions, medical expenses, sales of stock and all other income
  • Handling preliminary year-end tax work with Annual Tax Organizer

Trust | Estate | Divorce | M & A | Attorney:

  • Being a resource for quick access to data and financial statements
  • Setting up quarterly and yearly reviews of estate status
  • Court accounting for estate planning
  • Providing Trust accounting
  • Assisting with financial analysis in a divorce – read divorce case study
  • Tracking alimony, income and separate expenses
  • Separating business and personal transactions before sale of business – read sale of business case study

Financial Planner:

  • Providing an accurate snapshot of monthly spending
  • Customizing financial reports and budgets for planning needs
  • Setting up cash flow management
  • Tracking income and expenses on a monthly basis

Insurance Broker:

  • Setting up financial calendar of due dates, so there are no gaps in payment
  • Annual reviews of insurance policies
  • Detecting any gaps in coverage
  • Providing an accurate overview of valuable inventory

Banker:

  • Producing accurate personal financial statements
  • Assisting with documentation for loans and renewals
  • Tracking loan covenants
  • Accelerating the refinance process

Are you a Trusted Advisor with high-net-worth clients who would benefit from Plumb Bill Pay and Family Office Accounting services? Please reach out for additional information or an introductory meeting.



Personal Financial Reports that Create Financial Clarity (Top 4)

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Personal financial reports & insights that you need to make knowledgeable decisions about your wealth.

Plumb Family Office Accounting delivers financial peace of mind by providing personal financial reports with the highest quality of data to show a holistic view of personal wealth.  A typical Plumb client leads a busy life with complex financial undertakings, such as multiple investments, corporate entities, private equity, trusts, international exposure and collective properties.  In order to stay organized in their financial life, Plumb provides personal financial reports that reflect the multifaceted assets and financial holdings.

“The month-end personal financial reports that Plumb Family Office Accounting provides to my high-net-worth clients give a clear, aggregated picture of their current financial status and helps establish wealth preservation.” – Estate Attorney 

Plumb Family Office Accounting services are customized to meet the need of any situation from basic bookkeeping with bill pay to personal financial management and cash flow analysis.  Plumb works in partnership with their client’s personal financial team to streamline their efforts, giving them the backdrop to make better financial decisions.   Learn how Plumb Family Office Accounting works with Professional Advisors.

Plumb Family Office Accounting | Personal Reporting & Accounting Services:

  • Personal Financial Reporting & Analysis
  • Personal and Family Bill Pay
  • Cash Flow & Budget Management
  • Bank & Credit Card Reconciliation
  • Household Employee Payroll Services
  • Trust Accounting & Foundation Accounting
  • Personal Insurance Review & Coordination
  • Outsourced Personal/Executive Assistant Services

Personal Financial Reports & Analysis

Below are samples of the different types of personal financial reports that Plumb Family Office Accounting provides to their clients.  All the details of the report are collected per the 7-Step Process which is set-up at the beginning of the engagement. The main benefit of the personal financial reports is that they show consolidated and accurate numbers that reflect all the assets of the client.

Statement of Cash Flow:

The Statement of Cash Flow Report is a monthly snapshot of inflow and outflow of cash.  As a consolidated report listing all the cash coming in each month and what is being spent, it provides a big picture of overall cash position.  This personal financial report is helpful to execute the financial plans of the client and to be more disciplined with spending and saving, if necessary for retirement.

 

Net Worth Statement:

The Financial Recap or Net Worth Statement Report is a consolidated list of assets by asset class and shows a holistic view of all investments from month to month.  The change variants are explained and analyzed into further detail in the financial notes section of the personal financial reports.

 

Family Monthly Budget:

This report is for the affluent family or successful entrepreneur who wants to track against a budget.  Typically, the outline of the budget is put into place in the beginning of the year with the help of the client’s financial planner.  Plumb Family Office Accounting tracks against Expense categories and sums up the over/under variance.  By having this family budget report it allows for more efficient meetings with financial planning and focuses on year-to-date changes.

 

Vacation | Second Home Expenses:

Since most of Plumb Family Office Accounting clients own a second home or more, we’ve developed a Vacation Home Expense Report.  This is a cost analysis report on the typical recurring expenses that center on real estate on a monthly basis.  It shows any trends or spikes in expenses and helps to identify any issues and be proactive as to why they may be occurring.  For example, one client had a spike in their water bill for two months, and Plumb Family Office Accounting identified that there was a leak in their pool and had it fixed to lower their expenses.

 

Experience the Plumb Family Office Accounting Difference with Customized, Personal Financial Reports and Take Control of your Wealth



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Organizing Financial Records with Plumb Outsourced Accounting

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Be Year-End Ready

Here we are in the 4th quarter.  This is the time of year that Plumb works closely with their business clients and high-net-worth families, preparing and organizing financial records for year-end planning.

Effective year-end planning starts with organizing financial records to present accurate information and reliable data to our business client’s trusted advisors, such as CPAs and commercial bankers. This gives everyone a financial baseline to pave the way for the remainder of the year and kick off 2022 planning.

As part of Plumb’s 7-Step Process, the end of the year means “pulling it all together” and producing accurate accounting information with a year-end wrap up.  A tax package example from Plumb includes:

  1. Year-to-date Financials (Balance Sheet, Income Statement, General Ledger)
  2. Any significant adjustments that plan to be made before the end of the year
  3. Year-do-date fixed asset depreciation schedule, and the details of any purchases and dispositions made during the year
  4. Year-to-date Work in Progress Schedules
  5. Federal and state tax payment detail
  6. Charitable contribution detail
  7. Bank and credit card reconciliations

Get Started Now: Preparing for Year-End

When year-end and tax time rolls around, will your financial records be ready to present to a CPA or the IRS? Being prepared for year-end starts with setting up the right accounting systems and internal controls to process transactions appropriately.  Transactions must be correctly classified, current, consistent and compliant.  Organizing financial records starts with establishing accounting internal controls and procedures.  For top considerations for creating accounting internal controls, click here.

The Plumb Process:

With the start of every new engagement at Plumb an initial system map is designed, complete with tasks associated with daily, weekly, semi-monthly, monthly, quarterly, semi-annual and annual transactions. Once finalized with the client, Plumb’s proprietary system map is then uploaded into task management software with a calendar reflecting financial and administrative due dates.  These time-sensitive activities lead up to the year-end wrap up and final task of producing the annual tax package for the client’s CPA and trusted advisors.

Organizing Financial Records

The task management system at Plumb notifies accountants from their dashboard when items are due for specific clients.  With this organized and timely system, it allows for tracking income and expenses. It also keeping up-to-date with bank and credit card reconciliations and monthly journal entries.

Other notable tasks that help with creating accurate year-end financials:

  • Making sure income and expense categories are correctly classified.
  • Prepaid insurance and expenses must be amortized over the life of the term.
  • Reconciling unearned revenues.
  • Follow-up with collections.
  • Review fixed asset purchases.

“Working with Plumb gives me financial peace of mind knowing that I’m audit- and tax-ready every month of the year; my CPA has confidence in my year-end financials and takes less time processing my tax returns, which saves me money,” -Plumb Outsourced Accounting Client

Ready to organize your financial records and start your year-end planning?


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Family Office Services | FAQ | Plumb Family Office Accounting

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Family Office Services from Plumb Family Office Accounting

Frequently Asked Questions…

The family office services of Plumb Family Office Accounting were developed to help clients navigate through their complex financial life.  By providing personal financial management with consolidated reports and timely bill pay, it gives a clear picture of our client’s wealth and the analysis needed to implement financial, estate and tax planning strategies.

Q:  Is there a minimum net-worth to become a Plumb Family Office Accounting client?

Answer: No. We believe that comprehensive, timely and accurate information gives our clients true control of their wealth, regardless of net-worth.  By getting into the habit of tracking income and expenses, it helps our clients in their wealth creation stage by following a financial plan to accumulate long-term savings and retirement goals.

A typical Plumb client has a net-worth ranging from $10 million to $150 million and sees the value in our service if they have a complex financial life, complete with multifaceted undertakings, such as alternative investments, corporate entities, private equity, international exposure, and collective properties.

Success Stories: Plumb Family Office Accounting Clients

Q:  What is the difference between Plumb Family Office Accounting and a single-family office?

Answer: Plumb Family Office Accounting creates a virtual family office by providing family office services to include personal accounting, bookkeeping and reporting with controller-level insight on a part-time basis or as-needed.

Single-family offices are typically set-up with full-time accounting staff, including a CFO, staff accountants, CPA and a team of attorneys.

By having a virtual or remote family office with Plumb, clients receive the financial data and organizational structure they need without having to hire a full team of advisors on their payroll.  Plumb Family Office Accounting works in conjunction with the trusted advisors of each client and provides financial data to the team to make better estate, tax and financial planning decisions.

Read: Top Ways that Plumb Family Office Accounting works with Trusted Advisors

 

Q:  Does Plumb Family Office Accounting manage their client’s wealth or recommend financial strategies?

Answer:  No. We do not advise or manage wealth, do taxes, or financial planning. We prepare comprehensive reports for clients and their advisors to see a holistic view of assets, including the performance of all investments, statement of cash flow, and net-worth statement.

View samples of personal financial reports created by Plumb

Q: What is the pricing structure of family office services by Plumb Family Office Accounting?

Answer: The price varies depending on the complexity of the family’s wealth and reporting needs.  For most clients, we charge a fixed-fee engagement on transaction-based pricing. In order to come up with a pricing structure, we calculate how many bills to be paid, accounts reconciled and the frequency of their reporting needs (monthly, quarterly or annually).

Typically, our clients pay between $2,000 and $4,000 per month for family office services with the minimum engagement being $1,000 per month.  Every client undergoes an annual fee review to see if there have been any changes in the scope of work throughout the year.

Family Bill Pay – Request a Quote

Download: New Client Questionnaire

Q:  Do you provide any other family office services besides personal reporting, accounting and bill pay?

Answer:  Since the majority of our clients lead busy lives, we’ve added outsourced concierge and personal assistant services.  These are customizable based on the family’s need and can range from property management services to booking travel and restaurant reservations, household employee payroll and basic mail pick-up and distribution.  Another example of outsourced concierge is relocation assistance, a project-based engagement in order to help manage and organize a personal move.

See list of outsourced personal assistant services

Q:  Does a client need to be located in Southern California to work with Plumb?

Answer: No, all the financial reporting and bill pay engagements are handled electronically with cloud-based assistance.  Plumb Family Office Accounting uses technology to facilitate bill pay and A/P work flow with a client login system to access reports and status updates.

We offer complete account protection and robust security measures to protect your information from unauthorized access. All confidential information is stored in a data center with multiple levels of security and can only be accessed by Plumb and you or your designated representative. All sensitive information is encrypted and uploaded to your private portal. Two-factor authentication to login to portal further safeguards your accounts and information

Plumb has staff located on both the west coast and east coast time zones to accommodate nationwide and international clients.

Q:  Who is handling the relationship with Plumb Family Office Accounting clients?

Answer:  Plumb takes a team approach for each engagement.  Every client has a main point of contact, a Client Relationship Manager, who oversees a team of junior and senior staff accountants.  The team approach is more cost-effective for the client, as each transaction is mapped in our task management software, and is broken down on a weekly, monthly, quarterly and annual basis.

There is a centralized client communication portal set up via email, so the team has access to client-specific information and requests.  This ensures dependability and consistency if an accountant is out of the office, needs approval or controller-level insight.

Q:  How can I be assured that my financial information is kept confidential and secure?

Answer: Plumb has been in business since 1996 and has a long history of continuity and confidentiality. We are fully bonded and all employees have to pass a background check before they are hired. With every engagement and task, it is handled with the utmost discretion and attention to detail.

We respect the privacy of our Plumb Family Office Accounting clients and take great measures to protect it.  We ensure compliance with best practices and internal control procedures, different levels of approval and password protection.  Our solid system of checks and balances gives our clients reassurance in the integrity and security of their private information and financial data.

Q:  I have a special project that requires assistance on a one-time basis.  Can Plumb Family Office Accounting help?

Answer:  Yes, we can accommodate short-term engagements and project work.  For example, Plumb Family Office Accounting works with divorce attorneys and their clients who are going through a divorce settlement and need help analyzing and tracking expenses to finalize child and alimony support.

Case Study: Divorce Client

Q:  How is the family bill pay set-up?

Answer: We have created a 4-step bill pay process with segregation of duties and different levels of approval.

  1. Client Associate pays bills
  2. Vice President reviews and signs checks
  3. Client Associate reconciles bank account
  4. Client Relationship Manager reviews bank statements

The family bill pay process is first established with the creation of a financial calendar of due dates and vendor information sheet.

View: Family Bill Pay Services: Organize your Financial Life.

Success Stories – Family Bill Pay 

How can you help with organizing for year-end and tax planning purposes?

Answer: We assist our clients to compile the annual tax organizer for their CPA.  Creating this comprehensive, audit-proof package allows to maximize standard deductions, as well as, allows for the CPA to be more cost effective.

Additionally, we provide the CPA with quarterly reports to adjust estimated tax payments as needed to avoid annual penalties and interest charges with the IRS or Franchise Tax Board.

Learn More: Plumb Family Office Accounting Annual Tax Organizer

Are you ready to simplify your financial life and take true control of your wealth?   



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