What is a family office?
The idea of a family office is a flexible one. Fundamentally, a family office is an entity that has been established to provide services to high-net-worth (“HNW”) families.
A key function of the typical family office is the management of the assets of one or more HNW families. These assets may be held by captive investment vehicles which form part of a broader wealth planning structure. A family office may also provide concierge services.
These can range from routine matters of family administration through to the management of luxury assets and
properties. A single family office (“SFO”) is one that provides services to members of the same family. This may be contrasted with a multi-family office (“MFO”) which provides services to members of different families. SFOs in particular are becoming an increasingly important part of the wealth planning landscape.
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Why establish a family office?
The services that may be provided by a family office are almost infinitely varied.They are loosely grouped as follows:
Investment Management
Managing accumulated wealth. This may be on a discretionary basis or supervising external managers.
Family Administration
Providing administration servicesto individual family members.
Luxury Assets
Managing the administration of luxury assets such as residential properties, aircraft and yachts.
Family Governance
Centralising and formalising decision-making.
Philan Thropy
Furthering philanthropic objectives through direct initiatives or grant-making.
Single Family Offices (“SFOs”) in Singapore
Why Singapore?
Singapore is a leading financial services hub and is regarded as a gateway to the region.
It is renowned for having an open and wellregulated economy that is well served by a vibrant ecosystem of bankers, fiduciaries and advisors.
Singapore has low rates of both personal
and corporate taxation.
It has a measured approach to regulation with agencies such as the Monetary Authority of Singapore (“MAS”) and the Economic Development Board (“EDB”) adopting a pro-business approach.
Singapore is a place where many HNW individuals and their trusted advisors are happy to live and work.
It is well connected internationally with direct flights to most investment and lifestyle destinations.
A Singapore SFO can be used as part of the personal planning of HNW family members.
A Singapore SFO may sponsor employment passes and may even be used as part of an application for permanent residency by HNW family members under the Global Investor Programme which is administered by the EDB.
What are the different SFO structures to consider?
The SFO structures in Singapore are typically designed to be exempt from regulation under local securities law. This avoids the need for the SFO to obtain a license or become registered to provide fund management services
to the investment vehicles held by a HNW family.
There are two exemptions which are typically relied upon:
1. Exemption for ‘related corporations’ which applies automatically.
2. Application to the MAS for an exemption from regulation The MAS may grant this exemption where an SFO only manages assets which are held by members of the same family.
An SFO which is either licensed to provide fund management services, or is exempt from licensing, is considered to be a fund manager for the purposes of Singapore’s fund tax incentives. These are established by specific provisions in the Singapore Income Tax Act 1947 (“ITA”). These incentives provide an exemption from Singapore tax on income and gains made in relation to most types of financial assets. Notably, this tax exemption does not apply to income or gains from Singapore real estate and certain other financial assets which confer an indirect ownership interest in Singapore real estate.