According to research from the Boston Consultancy Group, India was home to 284 ultra-high net worth households with US$100m or more in 2013, and to 175,000 millionaire households. As it is projected to become the seventh wealthiest nation by 2018, demand for family offices is set to rise and Jersey is the ideal location.
ROLE OF THE FAMILY OFFICE
Every family office is different and bespoke to the needs of the family it is serving. Some are focussed exclusively on managing the family's investments or its concierge and travel needs. Others, including Bedell Family Office, provide professional support to the family, such as assisting with governance, financial reporting, project management and trustee and corporate services, and become the family's trusted advisors over time.
WHY CHOOSE JERSEY?
A number of factors are important to Indian families when deciding where to locate their family offices:
If the family office will be managing asset holding structures, it is important to find a location that is tax efficient. Jersey benefits from tax neutrality, with 0% income tax on foreign owned companies (with exceptions for regulated and infrastructure businesses) and no capital gains taxes, wealth taxes or inheritance/death taxes.
Recruiting and retaining the best professionals is a primary issue for family offices and the nature of the family office may impact on the types of professionals required. Professionally trained staff working in the finance industry make up nearly 25% of the working population in Jersey1. Included in this are a large number of family office professionals and trust professionals, who have vast experience in setting up and running complex structures and in helping wealthy families manage their assets and lifestyle.
A reputable family office needs to be based in a jurisdiction with secure communication links and great infrastructure, including banking facilities and specialist professionals in accounting, tax, legal and other areas. Jersey has an exceptional financial infrastructure for its size, with all major accountancy firms represented. There are 5 first tier legal practices and 34 international banks (all listed within the top global 500), with over US$224 billion in banking deposits2.
Jersey is in the same time zone as the UK so it is 5½ hours behind India Standard Time, meaning that there is a substantial part of the working day that crosses over. English is the main language in Jersey, with sterling as its currency.
Legal and political system
Jersey has its own democratically elected government and decides on its own tax laws - this independence from the UK and political stability has been preserved via charter and convention since 1204. Furthermore, Jersey operates its own well respected judicial system based on common law principles, so it will be familiar to Indian families.
Jersey's stability will be particularly relevant if ownership structures are going to be based in the family office jurisdiction. In certain cases this may drive the family office location to being outside India or wherever the wealth has been earned, to provide better privacy within the family's home jurisdiction.
Obviously tax laws and regulations continue to evolve, but Jersey is in a good position to preserve this stable political, legal and tax position, having demonstrated its ability to adapt to tax transparency and regulatory best practice in the past. This transparency is now a fact of life and may lead to less well regulated jurisdictions ceasing to exist as financial centres in the future. Jersey has, however, always insisted there is a level playing field to ensure that its competitiveness is not affected.
Regulation and legal structures
Jersey is a well regulated jurisdiction and is rated as one of the best international financial centres globally by the International Monetary Fund (IMF). The regulation of investment and fund business, and trust and company administration business, is well established and understood, and provides a best practice framework which will no doubt give Indian families greater comfort with regards to the protection of their assets.
In addition, Jersey has a wide range of legal structures available to choose from for the family office: asset owning and charitable structures (including trusts); foundations; limited liability companies (including the protected cell companies); and limited partnerships.
With over 50 years of private wealth management experience, Jersey is often used by wealthy Indian families for asset protection, estate planning, family governance and by UK resident non-domiciled Indian families to manage their tax affairs in the UK. Jersey offers tax neutrality, political and legal stability and an array of ownership structures. This is combined with excellent infrastructure (English language, UK time zone and ease of access to London) and a well trained workforce who are highly experienced in wealth management. It is therefore not surprising that there are a growing number of Indian families setting up family offices in Jersey. This has been helped by an increasing number of Indian families moving to London and using Jersey as a convenient jurisdiction for their asset ownership structures.
Originally published by Wealth Management.
1 States of Jersey Labour Market Report June 2013
2 Financial Services Industry - Quarterly Report (June 2014)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.