Most family offices are built to manage money. Far fewer are built to survive the families who own them.
Only 53% of family offices have a succession plan, and only half of those are formal written documents, according to an RBC Wealth Management and Campden Wealth survey. Yet governance remains an afterthought at many of these organizations, assembled reactively when a crisis forces the issue rather than built deliberately before one arrives.
Nicholas Mukhtar, founder of Fort Lauderdale-based management consulting firm Tera Strategies, has spent years working with family offices on exactly this problem. His clients range from multi-generational wealth holders to first-generation founders who have recently moved assets under a formal office structure. What he describes is a consistent pattern: families that struggle with governance tend to repeat the same mistakes, and families that get it right share a small number of concrete habits.
The Mistake That Undermines Most Family Offices
Ask Mukhtar to name the single most common governance failure, and his answer is direct. “The biggest mistake is not getting their kids involved early enough,” he said in a recent interview. “You don’t know what life has in store.”
He points to situations where a sudden death or accident leaves heirs with no understanding of what was built, how it was structured, or what to do next. As one first-generation executive put it in Deloitte’s 2025 Family Office Insight Series, “the biggest risk to most Family Offices is the family” — particularly when no plan exists for who takes over or how.
Nicholas Mukhtar frames this not as a financial oversight but as a relationship failure. The wealthiest principals, he observes, are often the least prepared for transition — not because they lack resources, but because building the business consumed every available hour. “The ones who make mistakes are often so busy building their business — doing whatever led to their success — that they forget why they’re doing it: for their family and the next generation,” he said.
What the Best-Governed Family Offices Actually Do
The contrast Mukhtar draws between families that get governance right and those that don’t comes down to one practical habit: early and deliberate involvement. He describes the strongest clients he works with as those who treat financial education as a running conversation with their children, not a one-time disclosure before death. “I’ve seen clients who do a great job,” he said. “They set their kids up with a small account at age 10 or 11, have them pick stocks, and teach them the value of time in the market, saving money, and allocating into buckets.”
That approach — incremental, hands-on, starting well before any transfer of formal responsibility — is the inverse of what most founders actually do. Advisors who work with ultra-high-net-worth families describe the same pattern Mukhtar sees: financial literacy treated as an adult conversation rather than a childhood one, governance documents prepared for attorneys rather than for heirs, and next-generation members handed the keys to something they were never taught to drive.
Nicholas Mukhtar ties this gap directly to the psychology of high-achieving founders. People who have spent decades accumulating wealth often struggle to slow down long enough to bring their families along, and the structures that would protect what they’ve built are deferred indefinitely. “When you’re a high-performing, high-achieving individual,” he said, “it’s even harder to slow down and actually do family planning with the people who matter.”
Communication as Infrastructure
Mukhtar is careful not to reduce family office governance to legal documents and org charts alone. He places communication at the center — not as a soft skill but as the functional mechanism through which governance actually holds. When he works with a family office where tension has surfaced, his first diagnostic question is almost always the same: did anyone actually sit down and say what was bothering them?
“Communication is key on any team,” he said. “I played sports growing up. My dad’s a legendary high school soccer coach in Michigan. That’s the theme in sports, in business, in life, in partnerships, in marriages and families.”
Bank of America’s 2025 Family Office Study found that family offices with highly involved principals are significantly more deliberate about succession, with more than 40% beginning to onboard the next generation as soon as members express interest or reach a defined milestone, compared to fewer than a third of offices where principals are less engaged. Founder engagement, in other words, predicts governance quality more reliably than the sophistication of any document. Families where the principal stays present tend to build clearer structures. Families who check out early leave their successors to figure it out alone.
Families Nicholas Mukhtar has seen struggle most are not necessarily those with the least wealth or the least sophisticated legal arrangements. They are the ones where spouses have no visibility into what has been built, where adult children have been kept outside operational decisions for years, and where a single unexpected event could surface conversations that were never had.
Governance as a Living Structure, Not a Filing Cabinet
Nicholas Mukhtar is not prescriptive about which formal structures a family office should adopt. His view is that governance needs to fit the size and culture of the family, and that adding layers of complexity for its own sake often makes things worse. What he is consistent about is that the structures, whatever form they take, need to be actively used and revisited when circumstances change.
Practitioners who work with multi-generational wealth families make a similar observation: a family charter or council only delivers value when it is woven into how decisions actually get made day to day, not drafted once and filed away. Governance lives in behavior, not binders.
From a practical standpoint, the highest-leverage starting point for most family offices is simply clarifying who has authority over what. When approval for every decision flows through a single person, operations stall and frustration accumulates quietly. A written framework defining decision scope at different levels — and reviewed when the family changes — removes that bottleneck without requiring a wholesale overhaul.
Mukhtar’s framing of this challenge draws on lessons from working at the intersection of public institutions and private enterprise. Large family offices, he notes, can calcify the same way big-city government does: slow to adapt, resistant to outside perspective. The antidote, in his view, is the same one that worked in New York City’s parks revival and Detroit’s public health work — bringing in outside voices not embedded in the day-to-day. “There’s a lot of cynicism about companies using McKinsey and outside consultants,” he said, “but the rationale is sound: you bring in an outside voice that isn’t ingrained in the day-to-day, and can actually think creatively.”
For Nicholas Mukhtar, the clearest signal that a family office has built governance that works is not a polished charter or a well-structured board. It is something quieter: the next generation actually knows what was built, understands how it works, and has been brought into those decisions early enough to feel ownership rather than obligation. “The ones who do it well keep their family closely involved,” he said. “The ones who struggle don’t.”
