IN201 - The Advantages of a Family Office and How One Can Be Used to Best Effect

In recent years an increasing number of wealthy individuals and families have realised the benefits of establishing their own private family office. The concept originated in the United States of America and is now well established in Europe.

Strategic planning for family members and their wealth is a major element within any family office. Appropriate structures need to be selected to preserve family wealth for current and successive generations of family members. Additional support often extends to day to day management of family life, including accounting and tax compliance services, the management of legal affairs, property management, managing household staff, making travel arrangements and organising concierge services.

The Objectives of a Family Office

Each family office will have its own specific aims, but generally the objectives for a family office would include:

• To develop family wealth for future generations by managing wealth to increase the value of family assets.
• To minimise taxes on wealth and inheritance.
• To provide a strategic framework for a planned transfer of wealth between successive generations.
• To generally assist individual family members in providing advice relevant to their particular circumstances.

The Benefits in Operating a Family Office

The increasing mobility of individuals within families can present challenges in terms of wealth preservation, but, if properly managed, this can also create opportunities. The following benefits may be enjoyed through the use of a family office:

• Cost savings can be generated by having a dedicated team of advisers with an in-depth knowledge of the family’s particular circumstances. Independent advisers can also be used in the different countries of residence of individual family members.
• Continuity of management and an understanding of the particular relationships between individual family members.
• An increase in the degree of organisation and control over family affairs.
• A separation of private family matters from the family’s business interests.
• Retaining independence and control over family activities in a confidential manner.
• The family office can often be used to help preserve a special family identity and to centralise philanthropic work.

Dixcart and the Family Office

Dixcart is experienced in providing the professional, fiscal and legal services required to manage and support a family office. Dixcart’s independence is an advantage in terms of sourcing the most appropriate financial and commercial advice.

The Choice of Jurisdiction

A number of factors should be taken into consideration when selecting the jurisdiction in which a dedicated family office is to be located. Key factors include the tax regime, the international ranking and the stability of the jurisdiction. A flexible legal framework for international business is also an important consideration.

The Dixcart Group has the resources to establish dedicated family offices in a variety of jurisdictions. Two of the most popular locations for a family office are Guernsey and the Isle of Man.

Why Consider Guernsey and the Isle of Man

• There are no capital, inheritance or other wealth taxes in either Guernsey or the Isle of Man.
• Guernsey was voted International Finance Centre of the Year 2008, announced at the STEP Private Client Awards 2008/9.
• The personal tax regime in the Isle of Man includes generous personal allowances, a 10% tax band and a maximum rate of 18%. For high net worth individuals living in or moving to the island, there is a maximum income tax on residents of £100,000 per annum.
• The Isle of Man and Guernsey are Common Law jurisdictions for Trusts, making their Trust Law comparable to England. Unlike Trusts in England however, income can be accumulated throughout the perpetuity period, which is 150 years in the Isle of Man and unlimited in Guernsey.
• Provisions exist in both Guernsey and the Isle of Man for the establishment of “Purpose Trusts”, which can be used to address foreign forced heirship issues.
• Guernsey has pioneered the use of the Protected Cell Company (PCC) which is now a key corporate vehicle for many family office structures.
• The finance industries in Guernsey and the Isle of Man offer skilled professional staff experienced in providing the services that a family office may require.
• Aviation and marine insurance specialists are located in the Isle of Man and Guernsey and each Island has a strong international maritime registry. The Isle of Man also has an efficient aircraft registry. These factors are of benefit to owners of private aircraft and of yachts.

Summary
The use of a family office is becoming increasingly frequent as the preferred means to manage the affairs of wealthy families that may be physically spread across the world. Dixcart offers the independence, experience and range of services to organise a family office efficiently and to maximum benefit. Both Guernsey and the Isle of Man are favourable locations to establish and administer a family office.

Additional Information

If you require additional information regarding the organisation of a family office, please speak to Alan Corlett at the Dixcart office in Guernsey, Simon Kelly in the Isle of Man or contact us.