Daniel Geltrude is managing partner at his namesake accounting firm, Geltrude & Company, in Nutley, N.J. Many accounting firms have established family office practices, and they all tend to work differently, providing different expertise. Geltrude & Company has a very accomplished, highly specialized family office practice. (This interview was slightly edited for clarity.)
Prince: Many accounting firms have family office practices, and there’s no consistency on what that means or what they do. Big picture, what is your family office practice all about?
Geltrude: Our family office practice is more about whom we work with than a traditional family office. The very wealthy, whether they have a formal family office or not, all have many tax-related issues and concerns. Also, the more complex their personal and business situations, the more often taxes play a role. Our primary job is to help them address their tax issues and concerns. We regularly find ways to minimize taxes for these families.
In a related vein, many wealthy families are concerned that their planning will do what it’s supposed to do. Without question, stress-testing is a big trend among family offices. The ability to evaluate how their plan, including the financial products they’re using, will work in different scenarios. When it comes to stress-testing, we usually team up with other high-caliber professionals such as insurance agents, leading trusts and estates attorneys, and wealth managers to conduct the analyses.
Geltrude & Company is an accounting firm and can also provide an array of services from bill paying to valuations and from compliance to litigation support services. While we will connect with very wealthy families because of our tax expertise, over time some clients will end up using the firm for more basic accounting and administrative work.
Prince: How did you decide to create your firm’s family office practice?
Geltrude: I could tell you we analyzed the family office universe, and we did an in-depth competitor analysis and completed a detailed SWOT matrix for strengths, weaknesses, opportunities and threats. I could tell you that, but I won’t because that’s not the way it happened.
What did happen is that we ran into some extremely wealthy families who were concerned they were not doing everything they could to legally mitigate their taxes—and they were paying a great deal of taxes. While we were able to be of some help, I quickly saw that there was a lot we were not prepared to deal with. My solution was to build out the expertise that became our family office practice.
Prince: When you say, “build out the expertise,” just what are you referring to?
Geltrude: Geltrude & Company is an accounting firm in New Jersey you might miss driving down our street. But we have some of the smartest tax experts focused on the matters that the very wealthy are likely to face.
Building up the tax and planning sophistication of the firm wasn’t enough. There are a lot of uncommon esoteric tax, investment and planning issues a few very wealthy families end up having to deal with. That’s why I reached out and identified a good number of leading professionals in other fields as well as some astounding international tax experts who specialize in in-bound planning.
While we can, inside the firm, handle most tax and accounting matters for very wealthy families, because of the specialists I can access we can pretty much handle any tax and accounting issues very wealthy families might have.
Prince: So you saw a business opportunity and you enhanced your firm to tackle the opportunity. What do you see in the future for family office practices like your own?
Geltrude: We all know that the rich are getting richer. Also, there are more wealthy families today than ever before. These two trends are only going to intensify over the next decade. Mark Cuban, for instance, said that the world’s first trillionaire would be an AI (artificial intelligence) entrepreneur. An enormous amount of personal wealth is being created.
Death and taxes are two inevitabilities. No one at my firm is a doctor, but we have the tax specialists. Taxes and the issues surrounding them are never going away. They’ll change—all the time—but they’re here to stay. Accounting firms like mine that have put in the time, energy and money to make sure they have the expertise to help the wealthy, using sophisticated tax planning, legitimately lower their tax bills will continue to be in demand.
It’s not just family office practices at accounting firms that are [benefiting]—and will continue to benefit—from all the private wealth creation; all the other types of professionals catering to the very wealthy will also benefit. For example, we see more and more money being entrusted to wealth managers. We work extensively with a number of private client lawyers whose businesses are booming because of the amount of legal services wealthy families require and are very willing to pay top dollar for.
When I think about it, I consider myself lucky running into those early wealthy clients and a little it smart for deciding to build a family office practice.
Prince: You said taxes are forever, yet the state estate tax was recently eliminated in New Jersey. Based on your experience and background, what do you see happening if the federal estate tax were eliminated?
Geltrude: Because of political and ideological ramifications, the tax laws are always in flux. What that means is that we have to keep abreast of what’s being seriously considered and what the impact would be for our clients and for wealthy families in general. And we have worked out various strategies that would benefit the very wealthy if indeed the federal estate tax were eliminated.
What is required is that a wealthy family reviews their situation. We can help them evaluate their planning, including the life insurance they might have purchased in order to pay their estate taxes. Very likely there are going to be ways they can restructure things to make them less complicated and even more tax efficient. Also, the family will need to make decisions about life insurance.
Transitioning from traditional life insurance policies to private placement life insurance is something a growing number of very wealthy families are doing now for a variety of logical reasons. Without a federal estate tax, this trend is going to dramatically accelerate. We have extensive expertise in how to critically evaluate these types of situations, and if it makes sense to transition to a private placement life insurance policy, we can assist.
Let me also say that even if the federal estate tax were eliminated, and the same goes for New Jersey, the tax code is always being tinkered with. There’s a really good chance that these estate taxes will eventually come back.
Prince: What is the biggest obstacle to the success of your family office practice?
Geltrude: We have a state-of-the-art tax practice geared to the needs and wants of wealthy families. I’m not in any way conceited or foolish enough to not recognize there are other tax professionals that may be as good as we are. So not only do we have to commit the resources and work very hard to stay at the cutting edge—which we do—but we also have to get the word out.
I’m a very big believer in thought leadership. It’s essential to the success of any tax, investment, insurance or legal practice catering to wealthy families. Not only is being a thought leader critical to connecting with the very wealthy, it also is fundamental to being on the cutting edge.
I appear regularly on television and radio where I provide insight into advanced tax and business planning. I teach a variety of accounting courses at Montclair State University. Also, I’m a member of the New Jersey State Board of Accountancy. Very importantly, I’m regularly sharing tax strategies and best practices with other professionals.
It’s really the exception, not the rule, that very wealthy families will refer you to their peers. Being a thought leader in the field, in my professional community, is critical to sourcing new wealthy families with tax issues.
Prince: Thank you for your time.
