FAQs: Singapore family office
The world of high-net-worth individuals and families often requires specialised, bespoke management of their complex financial and personal affairs.
This is where the concept of a family office comes into play. These entities, adaptable and diverse, provide a comprehensive suite of services, from investment management and tax planning to concierge services and philanthropic endeavours. This article from Novia Lu, Commercial Director, and Shawn Wang, Director, delves into the intricacies of family offices, exploring their various types, core functions, and the compelling reasons why Singapore has emerged as a leading global hub for these sophisticated structures.
They examine the unique advantages Singapore offers, including its favourable tax regime, robust regulatory environment, and strategic location, while also addressing the specific regulatory considerations and tax benefits that make it an attractive destination for both single and multi-family offices.
1. What is a family office, and what are the different types?
The concept of a family office is adaptable and loosely defined.
At its core, a family office is an entity established to provide a wide range of financial, investment, and concierge services to high-net-worth ('HNW') families.
The typical family office manages the assets of one or more HNW families. These assets may be held by captive investment vehicles as part of a broader wealth planning structure. A family office may also provide concierge services, ranging from routine matters of family administration, e.g., immigration and education, to wealth management, e.g., private equity, securities investment, properties and luxury assets, etc.
As opposed to traditional wealth management solutions, family offices cater to either a specific family or different families. A single-family office (SFO) provides services to members of the same family, whereas a multi-family office provides services to different families.
2. What are the functions of a family office?
Family offices have different responsibilities and services that depend chiefly on the unique family-specific objectives. This includes asset management, investments, and tax planning to estate planning.
Key services include:
Investment management: Often a key focus, one of the main objectives of a family office is to accumulate and grow the family’s wealth via strategic investments, in accordance with the family’s attitudes and values towards investing. This includes managing investment portfolios, analysing market trends and making strategic investment decisions across different asset classes. At times, this may involve supervising a third-party investment manager.
Family administration: Providing administration services to individual family members, including but not limited to, concierge services and personal tax and legal planning.
Luxury & alternative assets: Managing the investments and administration of luxury and alternative assets, including residential/commercial properties, digital assets and private yachts.
Philanthropy: Depending on the family’s goals, values and risk tolerance, family offices could be appointed to manage family assets which have been allocated for charitable and philanthropic objectives. These include direct or grant-making initiatives.
Family governance: Different families have different governance controls. At times, the family business forms a key aspect of the family’s wealth. Family offices allow for alignment of family direction and values, including formulating family constitution and governance documents.
3. Why is Singapore a popular jurisdiction for family offices?
Singapore has emerged as the leading Family Office Hub in Asia. Singapore has become the region’s preferred destination for establishing family offices due to:
Ease of doing business
Political and economic stability
Legal and transparent system
Strategic location
Attractive tax and regulatory regimes
4. What makes Singapore an ideal destination for family offices?
Singapore offers a strong rule of law, a robust family office ecosystem and infrastructure, seamless connectivity and a high standard of living that make family offices thrive in the city-state. Coupled with low personal and corporate tax rates, an open and well-regulated economy and a stable and accessible pool of human capital, Singapore is a well-positioned as an ideal destination for family offices.
5. What are the tax benefits for family offices in Singapore?
Singapore has attractive tax incentives that might be relevant for family offices:
Section 13O and Section 13U fund tax incentives: The Enhanced-Tier Fund Tax Incentive of Section 13U or the Singapore Resident Fund Scheme of Section 13O are commonly applicable for Family Offices in Singapore, providing a tax exemption on specified income (SI) derived from designated investments (DIs) which includes a wide range of investments.
For single-family offices that manage the funds of a particular family via related entities, it does not need to hold a fund management license. Otherwise, the family office may wish to apply to the Monetary Authority of Singapore (MAS) for an exemption.
6. How are family offices in Singapore regulated?
As family offices chiefly invest the family’s own assets, they are typically designed to be exempt from regulation under Singapore securities law. Family offices typically do not need to obtain an investment license or become registered to provide fund management services for the HNW family.
How can Ocorian help?
Our dedicated family office team can provide a seamless and holistic approach to the challenges and opportunities families face.
We offer a wide range of administrative and lifestyle services to a single individual or family or establish and maintain a sophisticated and full family office for those with more complex needs.
We can support your wealth by acting as an outsourced family office or multi-family office work and with established family offices or advisors to fill gaps in their in-house provision.
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