Family office

A family office is an entity set up to manage the wealth of high net worth individuals and their families. It supports wealthy families by providing specialised services in various areas such as investment management, trust and estate planning, legacy planning and wealth transfer, tax and financial planning, budgeting, insurance, risk and compliance management, philanthropy and governance.

Singapore is a choice location for asset and wealth management. It has a stable political and business environment, as well as an attractive tax regime with several tax treaties and free trade agreements that would work to your family office's advantage. Singapore also does not impose inheritance or capital gains tax.

There are also robust policies in place to promote the city-state's financial and asset management sector, and keep it well-regulated. Take for instance the Variable Capital Companies (VCC) structure, which provides greater flexibility in the establishment of investment fund structures.

Wealthy families typically hold their assets and investments via holding companies or special purpose vehicles. However, managing these entities may not be as efficient as they usually straddle across multiple jurisdictions for confidentiality and tax purposes.

To circumvent these shortcomings, wealthy families are instead forming single family offices comprising a mix of specialists such as investment advisers, insurance directors, lawyers, property managers, and tax and philanthropy directors. In some cases, these advisers do not provide assistance themselves but rather, ensure that any external specialists engaged by the family are well instructed and managed.

Families may also choose to join hands with other families to establish a multi-family office. A family office can be made up of as few as two staff, or as many as hundreds.

By restricting knowledge on family wealth and family officers to trusted staff, a family office can ensure confidentiality. A team of specialists would also ensure that wealth management would also be more structured. Another benefit is that whenever there are incoming requests for donations, capital or political contributions, such requests can be politely declined on behalf of the family.

The next key reason for setting up a family office in Singapore is that the family would be able to set the policies and practices for managing their family wealth. They would be able to retain control over matters such as philanthropy, investment, and the distribution of dividends and income from their family business. By leaving these in capable hands, the family can free up time for other pursuits such as starting new businesses, charitable endeavours and networking.

Finally, family officers will be able to provide highly customised services. For instance, family offices may be tasked with leadership development for successors.

To get started with a family office, we need to set out the office's role, purpose, scope and accountability.

Here are some questions to consider:

1. What needs must be met?
2. What interests and responsibilities does the family wish to undertake
3. What assets will be managed? (art, trusts, real estate, yachts and planes, heirloom items)
4. What will the overall investment strategy be?
5. Are any specialists needed? What profile of people do the family prefer?
6. Family office leadership

(Running a family office typically costs 1% to 2% of family's active assets, but the final cost changes case to case)