Singapore Family Office
Concept
Family offices are investment and wealth management vehicles for wealthy families, this includes Family Education, Succession Planning, Tax Planning, Insurance, Lifestyle (Travels, etc), Property Management Legal Services for and to the Family, Asset Allocation, Bookkeeping, Philanthropism, etc.
Structure:
The Structure starts with a Holding Company in the form of a Private Limited Company incorporated in Singapore. This company fully owns two separate entities, one is the Family Office (often formed as a Private Limited Company as well), and an Investment Fund in the form of a Variable Capital Company, this VCC often acts as an umbrella fund, which creates several sub-funds to mitigate risks and liability.
The Family Office acts as the Fund Manager, managing the wealth and investments of the Family. The Fund pays the Family Office Management Fees.
The Investment Fund holds the assets, and each sub-fund is for each of the family purposes. For example, the “Lifestyle” sub-fund can be used to pay the family members’ education, travels, food, house expenses, hotels, etc. The Wealth Management Sub-Fund invests the family’s fund and buys shares or any other type of assets. The Tax Planning Sub-Fund is used to bear tax planning expenses such as lawyer fees, counseling, tax preparation, etc.
Trust Company being the owner of the Holding Company
In some cases, it is usual, yet optional, to add a trust at the top of the Structure owning the Holding Company.
The reason for the Trust is to provide an extra layer of protection against creditors. Once an asset is given into Trust, creditors can’t go after such assets because they no longer belong to the Grantor (the person or entity giving the assets into trust).
In the case of the US, some States require a certain period of time after the assets conveyance occurs in order to get the protection against creditors in order to avoid fraudulent conveyance.
The Family Office Structure allows the Family to still have 100% of the trust assets.
License Exemption
The Single Family Office can get a “Fund Management” Exemption (SFA Cap.289 & Para 5(1)(b), Second Schedule of the Securities and Futures Regulation), and Financial Advisory Service (Financial Advisers Act Cap. 110) Singapore (FAA) Regulation 27(1)(b) Financial Advisers Regulations, provided they manage funds for or provide financial advisory services to its related corporations
Tax Incentives
These tax incentive schemes, also referred to as 13CA, 13X and 13R because of their section in the Income Tax Act.
13CA For Offshore Funds:
Income Tax exemption on offshore funds incorporated offshore (not in Singapore) but managed in Singapore by a Singapore Based Manager.
13R Onshore Funds
Income tax exemption on funds (1) incorporated and (2) tax resident in Singapore, and also (3) managed in Singapore by a Singapore Based Manager. The fund size in order to benefit from this exemption has no restriction.
Global Investor Program
Certain Family Members can get a residency permit to reside in Singapore.
Residing in Singapore allows family members to profit from a very low income tax on their personal and business income.
About the Author:
Jean Franco Fernández Clark
Corporate & Tax Lawyer.
Speaks English/Spanish/French/Italian/Russian. 我学习汉语。