WHAT IS A FAMILY OFFICE?
At its simplest, a family office can be described as a private organisation established to hold and manage the wealth of one or more families. This briefing note will focus on family offices that serve a single family, rather than multiple families.
In addition to investment and wealth management, a family office may also provide a whole host of other services, depending on the particular needs and interests of the family that it serves. Examples of other services commonly provided by family offices include the management of household staff and property, making travel arrangements, day-to-day accounting and payroll activities, managing risk, co-ordinating and managing legal and tax affairs, co-ordinating and managing the family's philanthropic endeavours and the financial education of family members.
Every single family office is different and should reflect the needs and interests of the family that it serves. As such, they are bespoke structures and careful consideration should be had at the outset as to the scope of services that the family office will provide and its governance structure.
The structure established to hold the family's wealth may take an almost unlimited range of legal forms. Usually the structure will involve trusts, foundations and companies, but limited partnerships, limited liability partnerships and unit trusts may also be used.
The structure of a family office will be organised according to its purpose, the type and location of the assets it holds, any relevant tax considerations and the wishes and cultural values of the family involved.
Jersey family offices can either be hosted by a regulated trust company business in Jersey, or they may establish their own presence in the Island. If the former, then the trust company business staff will administer the structure and the family office will not need its own employees or premises.
Where the intention is for the family office to establish a real presence in Jersey, with its own premises and employees, certain regulatory and licensing requirements will need to be considered and met.
ESTABLISHING A PRESENCE IN JERSEY
A family office wishing to establish a new business in Jersey will need to consider whether a business licence is required in order to carry out its activities in the Island and engage any staff. Where there is a real presence in Jersey and the family office is employing staff in Jersey, then it is most likely that a business licence will be required prior to the set-up of the family office.
As part of the business licence application, the family office will need to consider whether specific permissions are required to employ individuals in the Island. If there are individuals who will be employed by the family office who are not resident in Jersey, or have not resided in Jersey for five years or more, the family office will need to apply for permission to employ those employees.
Jersey has its own employment and discrimination legislation which is different to those in the UK or EU. The family office's employment contracts, service agreements, staff handbooks and policies will all therefore need to comply with Jersey law.
Consideration will also need to be had in respect of other matters such as insurances and registrations with social security, income tax, and as required under the Jersey data protection legislation.
There are several options available to family offices looking to acquire or lease commercial premises in the Island. Jersey's property law is substantially different to the UK and other jurisdictions and so appropriate advice will need to be taken. For example, the acquisition of property or a lease for more than 9 years over property in Jersey requires a contract to be passed by the Royal Court of Jersey.
If any family members wish to relocate to the Island, a high value residency application will need to be made. This is a process by which approval for residency is granted based upon how an individual will contribute to the Island's economy and the community, in particular their likely contributions to the Island's tax revenue, both personally and from the family office business, or any other business that they may wish to bring with them.
If key family office personnel are relocating to the Island in order to run the family office, applications will need to be made for their employment and residency in the Island.
The extent to which the activities of the family office and its key individuals might need to be regulated will need to be considered in relation to both the Financial Services (Jersey) Law 1998 and the anti-money laundering regime in Jersey. As a result, the family office may also need to adopt internal policies and procedures in relation to matters such as anti-money laundering, risk and regulatory compliance.
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.