SingapurSingapore’s economy is known for beingopen and well-regulated, with a vibrant ecosystem of bankers, trustees and advisors ready to provide you with quality services.As such, for many HNW families, Singapore is not only a leading financial services hub, but also a gateway to the Asia Pacific region. Setting up a family office in Singapore has become a natural choice for them. Advantage of a Family Office in SingaporeWhat is a family office?The concept of a family office is very flexible and is essentially an entity that provides services to high net worth (“HNW”) families. The primary function of a typical family office is to manage assets for one or more HNW families.The basic structure of a single family office in Singapore is illustrated below. What are the functions of a family office?A family office can provide a rich set of services, mainly① Investment management: management of accumulated wealth. Depending on the discretion, it can also monitor the performance of external managers.②Family affairs management: providing transactional management services to individual family members.③Valuable asset management: transactional management of residential properties, aircraft, yachts and other valuable assets.④Family governance: centralization and formalization of decision-making.⑤ Philanthropy management: furthering philanthropic goals through direct action or funding.
Why more people choose single family officeWhat is a single family office?A single family office (“SFO”) is a family office that provides services to members of the same family.A multi-family office (“MFO”), on the other hand, provides services to members of different families. Single Family Offices are becoming more and more popular and are becoming an important part of the wealth planning industry.Tax Incentive Scheme for Single Family OfficesBased on the growth and maturity of the family office ecosystem in Singapore, and in order to further enhance its professionalism and environment, the Singapore government has updated the tax exemption schemes 13O (previously “13R”) and 13U (previously “13X”) for funds managed by single family offices in Singapore on 18 April this year (2022). “13X”).The major differences between the two are: firstly, the capital threshold is S$10 million for 13O and S$50 million for 13U. Secondly, 13O can apply for 2 EPs while 13U can apply for 3 EPs.The updates to the Singapore Family Office are as follows, which are applicable to those who apply for a single family office (i.e. held by a family member and applying for an exempted financial management license “CMS”) after April 18, 2022. Benefits of a Single Family OfficeOne of the main advantages of the Singapore single family office structure is that it can be easily integrated with almost any type of wealth planning structure.① Singapore is a highly regarded jurisdiction in terms of trust formation and administration.Singapore single family offices and the investment funds they manage are often held as part of a family trust. There are many advantages to using trusts, and well-structured trust assets are not considered to be owned by high net worth individuals and are therefore less likely to be the subject of recourse by creditors or other parties.②Trusts in Singapore aregenerally managed by professional trustees.The trustee may appoint an institutional trustee or a private trust company to act as trustee. A Singapore Single Family Office may also be part of an international wealth planning structure, ultimately owned by a foreign legacy entity.③The Singapore Single Family Office can serve as an important component of the philanthropic objectives of the high net worth family.The family office can be appointed to manage the assets of the HNW family which will be distributed to achieve philanthropic goals. These assets may be held in the form of a charitable trust or a separate entity such as a company limited by guarantee.④ The options for developing a family office structure are numerous.This flexibility is one of the reasons why the single family office structure in Singapore is so popular with high net worth families.
How to structure a family officeWhen structuring a single family office, these are important factors to consider.(i) Are there any foreign gift tax implications for the injected assets?(ii) Are there foreign estate tax implications for the assets in this type of structure?(iii) What is the most tax-efficient holding structurefrom a foreign tax perspective? Notably will income be deemed to be attributable to those family members who injected the assets or who may receive distributions?(iv) Does a single family office structure facilitate the transmission of wealth to the next generation? Does it complement the expected governance from the perspective of asset management and distribution to family members?(v) Are the assets managed by the single family office immune from adverse creditor claims or other recourse?(vi) Given the nature of the assets to be managed by the single family office, is there a need to further develop the structure?(vii) How will the income and assets be taxed after the family office makes distributions to family members?