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.
