Latin American family offices occupy a specific position in the global wealth management landscape. They manage multigenerational assets across multiple jurisdictions, operate in legal and regulatory environments that differ substantially from their U.S. counterparts, and typically involve family members at different stages of immigration, tax residency, and estate planning. Engaging U.S. legal counsel without understanding what that counsel needs to provide — and what it cannot — is one of the most common and costly mistakes family offices make when expanding into the U.S. market.
The Cross-Border Problem Is Not One Problem
When a family office in Bogotá, Quito, or Caracas asks for help with its "U.S. investments," the underlying legal question usually fragments into at least four distinct issues: the tax treatment of U.S.-source income for non-resident investors, the estate tax exposure of those investors on their U.S.-situs assets, the securities law requirements for any fund-like structure aggregating capital across family members, and the reporting obligations that arise for any family member who has become — or is about to become — a U.S. tax resident.
These issues are related but they are not the same problem, and they often require different analytical frameworks and different specialists within the same firm. U.S. counsel who focuses only on the investment structuring question without addressing the estate tax exposure is providing an incomplete solution. Counsel who drafts a holding structure without flagging the FBAR and FATCA implications for the family members who are already U.S. residents is creating a compliance gap.
What the Structure Must Accomplish
A well-designed U.S. investment structure for a Latin American family office typically needs to accomplish several things simultaneously. It must shield the family's U.S.-situs assets from federal estate tax at the death of non-resident family members — the $60,000 exemption available to non-residents makes personal ownership of meaningful U.S. assets untenable. It must avoid triggering U.S. effectively connected income (ECI) that would subject the family's investment income to net-basis U.S. tax. It must be consistent with the reporting obligations of any family members who are U.S. persons. And it must be capable of evolving as family members immigrate, family structures change, and asset portfolios grow.
The most common structure — a foreign holding company (BVI, Cayman, or Panama) owning U.S. assets directly or through a U.S. LLC — addresses the estate tax and ECI issues but introduces its own compliance obligations. The foreign entity must file Form 5472 if it has reportable transactions with a U.S. disregarded entity. U.S. person shareholders must report the foreign entity on Form 5471 if it qualifies as a controlled foreign corporation. The family office administrator needs to understand these obligations from the beginning, not after the first filing deadline passes.
The Immigration Inflection Point
Latin American family offices frequently include members at different stages of the U.S. immigration process. Some family members may be non-resident investors. Others may hold green cards. Others may be in the process of applying. This creates a moving compliance picture that U.S. counsel must be able to map and anticipate.
The moment a family member obtains a green card, that person's worldwide income becomes subject to U.S. taxation, and their ownership interests in foreign entities must be reported. If those foreign entities — including the family office's holding structures in BVI or Panama — generate passive income, that income may flow through under Subpart F or GILTI rules even without a distribution. A family member who immigrates without restructuring their interests in the family's offshore vehicles may face a substantial and unexpected U.S. tax bill in their first year of residency.
Good U.S. counsel advises the family office not just on current structure but on what the structure needs to look like as each family member's immigration status changes — ideally before those changes occur.
Securities Law: When Does the Family Office Become a Fund?
Latin American family offices that pool capital from multiple family members, manage those assets through a common vehicle, and make investment decisions centrally may be operating in a way that raises U.S. securities law questions — even if the principals do not think of themselves as fund managers. A family holding company that issues membership interests or partnership interests to multiple family members, manages their capital on a discretionary basis, and invests in U.S. securities may be an investment company under the Investment Company Act of 1940 unless it qualifies for an exemption.
The single-family office exemption from SEC registration as an investment adviser — codified in Rule 202(a)(11)(G)-1 under the Investment Advisers Act — has specific requirements, and not every structure that calls itself a family office qualifies. U.S. counsel advising a Latin American family office should evaluate whether the family office's activities in the United States trigger registration or disclosure obligations, and structure accordingly.
What to Look for in U.S. Counsel
Family offices evaluating U.S. legal counsel should ask a few direct questions. Does the firm have experience with non-resident alien estate planning — specifically the $60,000 exemption problem and the use of foreign holding structures? Does the firm understand the interaction between U.S. tax residency and the reporting obligations that apply to foreign structures? Has the firm advised other family offices with LATAM connections, and does it understand the absence of U.S. estate tax treaties with most of the region?
The answers reveal whether a firm has genuinely cross-border practice or simply handles U.S. domestic estate planning with occasional international clients. The distinction matters enormously for a family whose assets and members span multiple jurisdictions.