Across the globe, second and third generations are inheriting significant wealth and with it, the opportunity to professionalise how their family manages, governs and grows that wealth.
Many are establishing dynamic, multi-purpose platforms to suit
their unique governance, investment management, philanthropic and
succession needs.
The Channel Islands boast an exceptional concentration of
professionals with a depth of experience in private wealth,
investment structuring and capital (including "non-traditional
capital") management as well as political stability, global
connectivity, tax neutrality and approachable yet robust
regulators. For families looking to institutionalise their affairs
or use their in-house talent to make their own empowered, direct
investments, Guernsey and Jersey provide both flexibility and
rigour.
Through the below discussion of the typical components of a family
office structure, we explore the suitability of Guernsey and Jersey
for family offices and how our multi-disciplinary team can help
HNWIs, UHNWIs and families establish and evolve family office
structures in the Channel Islands.
What does a family office structure look like?
Typically, a family office brings together:
A holding platform to hold wealth and manage risk
Essentially this can be comprised of any type of legal structure
but often involves trusts, foundations and companies. Where trusts
are involved, the trust administration may be outsourced to
professional trustees or a private trust company (PTC) incorporated
to act as trustee of the trusts established for the family in
question.
Our multi-disciplinary team work together to advise on the
structure that best suits the needs of the family involved, taking
into account the tax position of relevant family members (where
family members are involved in decision making this will be of
particular importance and may dictate the suitability of one form
of arrangement over another), the benefits or disadvantages of
financial regulation of the structure, the intended level of
presence in the jurisdiction (which can range from minimal to
employee and/or family relocations) and the family's values and
ambitions.
An investment arm, often through a private fund or SPV structure
Through this part of the structure a family office can, if
desired, make its own direct investments acting upon the
recommendations of its in-house investment committee in addition to
(or as opposed to) investing via third-party investment
managers.
Depending on the needs of the family, it can be advantageous to
regulate vehicles of this nature. There are suitably robust yet
flexible and cost-efficient routes to regulating such vehicles in
both Guernsey and Jersey, including under their respective
"Private Investment Fund" regimes (see further here in relation to the "Guernsey
PIF" and here in relation to the "JPF").
Families are increasingly using the Guernsey PIF and JPF to
co-invest and pool capital with other like-minded individuals or
extend investment opportunities to friends, extended family, or
other trusted parties, particularly in high-growth areas like
venture capital (VC) and other alternative asset classes such as
data centres and e-gaming. Some families utilise vehicles of this
nature to help achieve their philanthropic goals, driving wealth
creation and innovation in areas close to their hearts.
We advise in relation to every aspect of the establishment and
"launch" of any vehicle of this nature (whether regulated
or unregulated) and throughout its lifecycle, in relation to all
corporate actions including, to name a few, acquisitions,
financings, migrations, mergers and dispositions as well as in
relation to regulatory compliance, beneficial ownership
requirements, tax and economic substance.
Family governance tools, such as charters, family councils and decision protocols
Our private capital and trusts practitioners work closely with families, onshore advisers (where relevant) and local service providers to draft governance documents to reflect family values and control mechanisms against the relevant tax, regulatory and economic substance backdrop.
Administrative operations, including staff, service providers, and office infrastructure
Specialists from our employment team are on hand to assist with
relocations to Guernsey (including matters of licensing and
immigration), employment contracts, director service agreements and
staff policies.
Our corporate and regulatory practitioners can advise in relation
to any service provider and outsourcing arrangements, data privacy
and information sharing agreements. We have a wide network of
professionals offering all relevant reporting, data security and
digital transformation services to family enterprises and are happy
to share our recommendations in this regard, working closely with
the appointed providers to achieve the level of sophistication
required.
We apply the same integrated and innovative services that we offer
to global financial institutions to private clients. HNWIs, UHNWIs,
families and their advisors look to us to help them navigate the
complexities of global jurisdictions efficiently for wealth
creation, asset protection and succession planning.
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.
