This article focuses on the requirements for a single family office. By reading this, you will have an understanding of what a single family office is and what it means to be one of them.
What is a Single Family Office and what requirements do they have?
A single family office (SFO) is a private wealth management firm that provides financial, legal, and administrative services to a single wealthy family. The term “family office” can refer to the physical location of the staff and offices, or it can describe the structure and organization of the business itself.
The concept of a family office has its roots in Europe, where many noble families employed individuals to manage their estates. In the United States, the first recorded family office was established in 1810 by Alexander Hamilton. Today, there are an estimated 2,000-3,000 family offices in operation globally, managing over $1 trillion in assets. In Singapore, the number of family offices in Singapore doubled to about 400 between 2019 and 2020 and then to 700 at end of 2021.
There is no one-size-fits-all definition of a family office, as each one is structured according to the specific needs of the client family. However, all family offices share some common features:
They are private organizations that are not open to outside investors.
They are created for the benefit of a single family (or multiple generations of a single family).
They provide comprehensive wealth management services, including financial planning, investment management, tax advice, estate planning, and philanthropy.
They are typically staffed by professionals with experience in multiple disciplines.
Many family offices also have an educational component, providing support and resources for the next generation of leaders.
How can a Single Family Office help your wealth?
A SFO can help your wealth by providing professional financial and investment advice, help to manage your finances, and provide access to a wide range of investment opportunities. They can also help to protect your wealth by providing risk management services and estate planning advice.
Getting a MAS tax incentive application
Singapore has put in place several tax incentive schemes to encourage the development of the SFOs. The two tax incentive regimes include the Enhanced-tier Fund Tax Incentive of Section 13U (formerly Section 13X) and Singapore Resident Fund Scheme of Section 13O (formerly Section 13R).
While certain key conditions would apply to funds managed by SFOs the same way as they would apply to funds managed by regulated fund managers in Singapore, the following set of additional and/or stricter conditions are applicable to fund vehicles managed or advised directly by a SFO:
There are a few requirements that must be met in order to get a MAS tax incentive application
Funds of less than $50 million in AUM fall under Section 13O and must now meet a minimum capital requirement of S$10 million when they apply, increasing to S$20 million within two years. They must also employ at least two investment professionals (IPs).
Funds of more than or equal to S$50 million in AUM fall under Section 13U and must now employ at least three IPs, with at least one of the three cannot be a family member.
Understanding the family office requirements
A family office in Singapore is a private company that provides financial and administrative services to a wealthy family. The size and structure of a family office can vary greatly, but they all share the common goal of helping the family manage their wealth.
There are many different types of services that a family office can provide, but the most common ones include investment management, tax planning, estate planning, and philanthropy. Family offices can also provide concierge services, such as travel planning and event coordination.
The requirements for setting up a family office in Singapore are fairly straightforward. The first step is to identify the purpose of the family office. This will help to determine the type of services that will be required. Once the purpose has been established, the next step is to choose a legal structure for the family office. The most common structures for family offices in Singapore are trusts, companies, and partnerships.
After the legal structure has been chosen, the next step is to appoint a board of directors or trustees. The board will be responsible for overseeing the activities of the family office and ensuring that it meets its objectives. Once the board has been appointed, the next step is to draft a constitution or set of rules governing the operation of the family office.
The final step is to register the family office with the Accounting and Corporate Regulatory Authority (ACRA). Once the registration is complete, the family office will be ready to start operations. This is just the beginning of the journey and we are here to support your ongoing needs.