The Family Office Concept – Protecting your Assets for the Future Generation

What is a Family Office

A family office is a private company that manages the day-to-day administration and management of a family’s affairs. The company’s financial capital is the family’s own wealth.

Family offices typically handle the following matters:

  • Investments;
  • Liaison with private banks;
  • Tax planning;
  • Property management;
  • Philanthropic planning;
  • Family governance; and
  • Succession planning

There are two types of family offices, the single family office or the multi-family office. There are also two ways in which the assets may be held – either in personal name or through a company.

In deciding whether to use a family office, one is likely to consider various factors. We set out below the pros and cons of using a family office, as well as information about setting up one in Singapore.

Advantages of Using a Family Office

  • Maximises privacy as the family maintains control over the people advising them
  • Objective advice will be delivered
  • Pooled purchasing power across a family group

Disadvantages of Using a Family Office

  • Expensive to operate
  • Privacy problems – risk of trustees siphoning money

Setting Up a Family Office in Singapore

Setting up a family office in Singapore is popular because of the attractive tax regime, which include the following:

  • Dividends are tax-exempt
  • Interest on monies in banks is tax-exempt if the assets are held in personal name (must be approved by the MAS). However, interest is taxable if the assets are held in the company’s name
  • No capital gains tax
  • For family office companies, specified income (including trading gains) from designated investments could be exempt in certain guidelines are met

There is no single way to set up a family office in Singapore. It depends on a range of factors, including the size of the family, the amount of assets and priorities of the family. Unlike a trust company, which requires a licence and a considerable amount of paperwork, establishing a family office is the same as incorporating a normal company, just one which caters to the specific goals of the family.