Family office in the United States: the SEC exclusion, state trust law and pre-immigration planning

Since the Dodd-Frank Act removed the old private adviser exemption, the federal framework for single-family offices has been Rule 202(a)(11)(G)-1 under the Investment Advisers Act. A family office that meets the rule is not an investment adviser at all, so it does not register, file Form ADV or follow the custody and marketing rules. The rule has three conditions. The office may have only family clients. It must be wholly owned by family clients and exclusively controlled by family members or family entities. And it must not hold itself out to the public as an investment adviser. Family members are the lineal descendants of a common ancestor no more than ten generations removed from the youngest generation, together with their spouses or spousal equivalents. Family clients also include former family members and key employees who have performed investment functions for at least 12 months. They further include charities funded exclusively by family clients, certain trusts and estates, and companies wholly owned by and operated for family clients. A non-family person who becomes a client through death or another involuntary transfer is treated as a family client for one year.

The exclusion is narrow, and breaking it has consequences. An office that adds a friend's family, takes outside capital into a family fund, or offers its platform to others becomes an adviser in the ordinary way. It must then register with the SEC, generally once regulatory assets under management reach US$100 million, or with its home state below that level, unless another exemption applies. Even an excluded office remains subject to other federal regimes. These include Schedule 13D/13G beneficial ownership reports, Form 13F once discretion covers US$100 million or more in 13(f) securities, large-trader reporting on Form 13H, and Hart-Scott-Rodino premerger filings. CFTC staff relief from commodity pool operator registration for family offices is set out in No-Action Letter 12-37. State securities law should be checked separately for the office's home state.

Long-horizon structuring takes place under state law. South Dakota, Delaware, Nevada and Wyoming compete for trust business with perpetual or very long-duration trusts, directed-trust statutes that separate investment, distribution and administrative roles, domestic asset protection trusts and, in some cases, no state income tax on trust income. Many families form their own private trust company to act as trustee of their dynasty trusts. South Dakota, for example, charters private trust companies under SDCL Chapter 51A-6A. It requires at least US$200,000 of capital, a US$1,000,000 fidelity bond and D&O cover, and examinations at least every 36 months. Federally, the 2025 reconciliation act set the basic estate and gift exclusion at US$15 million per person for 2026, indexed for inflation thereafter. The GST exemption follows the same amount, which makes generation-skipping dynasty trusts central to US planning.

Compliance changed in 2025-2026. FinCEN's final rule, effective 14 August 2026, removed Corporate Transparency Act beneficial ownership reporting for US companies and US persons. Only foreign entities registered to do business in a US state still report, and they need not report US-person owners. FinCEN also postponed its AML rule for investment advisers to 1 January 2028. For international families, the main issue is usually US tax residence. Green card holders and individuals who meet the substantial presence test are taxed on worldwide income. Transfers to foreign trusts within five years before residence can make the trust a grantor trust. US-situs assets of non-resident aliens have only a US$60,000 estate tax exemption. Pre-immigration planning should therefore be done before the first US tax year begins. It typically covers the timing of residence, basis step-ups, trust classification and the reporting of foreign accounts and trusts.