Why set up
Families traditionally held their investments through holding companies or through special purpose vehicles (SPVs), most often this is driven by the need for security and confidentiality.
By setting up in offshore jurisdictions they achieve segregation through separate SPVs, but increasingly they come to realise that the use of complex structures involving multiple SPVs on top of different jurisdictions makes management very inefficient.
This greatly increase the challenges of tax reporting and unwanted attention from the media.
There are many reasons for setting up a family office but one we often encounter is that the family are looking to be part of the the fund management function or be more actively involved in the management of their financial assets. The investment team may also include the next generation family members who not only want to manage their own wealth but build a track record with experience of managing wealth for the future.
The set up of a family office is normally accompanied with the setting up of a family fund. The set-up of a family fund institutionalises the holding structure of the family’s assets to facilitates succession planning and creates a more efficient and transparent structure.
Wealthy families are preferring to setting up a “master” holding company (or a family fund) which contain all their financial assets and SPVs in a simpler and cleaner structures.
Singapore has become the top choice for the set-up of a family office and funds. Advantages over other jurisdiction :
- strong regulatory framework
- ease of private banking relationships
- high level of transparency and accountability
- well-developed financial services industry and infrastructure
- pro-business well-rounded Government policies
- readily available labour talent
- family office and the investment teams of substance can be established.
The global development for higher tax transparency and the increasingly focus on structures in offshore jurisdictions has made the family office structure the preferred style for investment management and family management.
We will continue to see growth in the number of family offices being setup in Singapore as the efficiency and cost saving for setting up a family office remains viable.