Setting up a family office to ensure proper management and planning of your family’s assets is a vital step that must be established in compliance with certain rules. Since this preservation method is meant to stay put till the emergence of future generations, it must abide by some principles and take the advice of experts to produce the best results.
The stabilized Government structure and favorable environment for businesses allow Singapore to be home to families who wish to establish a family office.
After recognizing your family office objectives for the long term, you are then capable of moving to the next stage. In this stage, you and your family members must drive your attention to the following pointers to fulfill all the necessities of the process.
1. How to determine the objectives for setting up a family office in Singapore
How a family should manage its financial assets is what a family office is created for. From accounts consolidation to governance, providing solutions, portfolios, and tax filing for the entire family, the family office coordinates with all the activities.
To address all the issues, it is necessary to learn all the objectives for establishing a family office as closure eliminates risk factors and give optimal results. One of the biggest examples is, if a patriarch of the family wants to add an objective for his family members to permanently settle down in Singapore, he must ensure their inclusion in the Family Office Investment Committee, or else his request will be refused.
The family office also attends to issues regarding immigration and statuses of tax residency for moving across the border.
Similarly, the family office does not shy away from disclosing details about the family. As per the Common Reporting Standard (CRS), Economic Substance Code, and Declaration of Beneficial Ownership, it is necessary to carry out this exercise as it consolidates reporting obligations.
To help our partners get the maximum tax benefits out of tax exemption schemes, our Tax advisers provide expert advice on how to juggle their requirements without breaking any laws. Together with the Singapore lawyers and tax advisers, we ensure holistic advisory to our clients at every step of the way. This enables our professionals to provide you with the best suitable structure for your family office.
2. Pay attention to the assets you are injecting into the family office
From private companies to publicly listed companies and financial investments, several types of assets could be injected into your family office.
Real estate is also considered to be a type of asset but its injection into the family office might bring issues about inheritance or transfer tax. Based on whether jurisdiction applies to this property or not, the asset may or may not account for certain restrictions. Other types of assets also include artwork pieces, metals, gemstones, boats, private jets, family heirloom items.
Since lawyers are responsible for providing relevant legal advisory and information on the type of asset you choose to inject in your family office, it is imperative to determine your asset correctly and considerately.
Assets could also be grouped into categories of Bankable and Non-bankable assets, each referring to a different strategy. For instance, if a non-bankable asset might not have any productive strategy for investment, our service might help you gain profit from a different structure to operate your business as a Private Trust Company.
3. Investment strategy and mandate for the family office
We will start with a thorough analysis of our client’s profile and all the potential objectives that pertain to the investment strategies. We will also learn about the assets to be injected into the family office before moving to the next step. After determining these factors, we will lay out a strategic investment plan for your family office which perfectly suits your profile.
The Monetary Authority of Singapore (MAS) and the Economic Development Board (EDB) of Singapore would require a detailed and comprehensive business mandate from your family office for processing your application, hence, you must take care of the regulatory authorities when turning in an application.
4. How to apply to MAS for licensing and tax exemption?
When your business turns into a Single Family Office with different holding companies listed in your incorporation, your next step would be to apply for the Enhanced Tier Fund Tax Exemption Scheme (often referred to as Section 13X) with the following requirements:
There must be 3 or more investment professionals employed in your office. The annual local business spending of your family office must be $200,000 or more along with the fund investment of $50 Million, at least.
An interview will be conducted between the MAS and the business to analyze the status of the business and whether it should qualify for the Section 13X tax exemption or not. Thus, we will help our client prepare for it as it will entirely focus on investment planning.
For certain assets, such as shares, derivatives, stocks, and securities, tax is exempted. Based upon the assets, the 13X exemption scheme decides which income should be exempted provided that income comes from a designated investment only.
5. What are the ongoing operational requirements?
Once your family office is all set to turn operational, a few requirements must be considered to conduct every step in an authorized manner. For instance, our Service providers will help you in assembling the portfolio and reports about annual tax, CRS, and FATCA. To establish a reliable IT system and register for bank accounts, our professionals will provide you full-on advisory. Lastly, for regular audit reports, we will ensure the visits of external auditors at your office.
For strategic investment planning and advisory we, at Singapore Family Office, will assist you every step of the way.
6. Succession planning tools to consider
This is where you along with your family governance guidelines put a Family Constitution in place for the succession of the family office for the long term. The Constitution plays a huge role in making things easier in the future for family members. After this, we will look for the ownership of the family office in terms of Lasting Power of attorney, private trust companies, and will. Since clients wish to pass their portfolio about all the business details on to their children, we will provide the necessary training and assistance to ensure a proper understanding of their businesses and management criteria.
7. Philanthropic trend in wealthy families
Philanthropy has become the latest subject of interest to wealthy families. With moving time, more and families have been following the trend of donating to charities or setting up a trusted program. With the help of a family’s philanthropy objectives, we can easily formulate the areas which are truly favorable and help them join hands with partners who facilitate these objectives fully.