Family office structures are an alternative way for HNWIs to manage wealth and personal affairs. The flexibility and control they afford families has increased their popularity over the last decade, particularly since the 2008 financial crisis, which revealed the vulnerability of larger, less agile institutions. This remains relevant in today’s pandemic.
Benefits of a family office include the family having active control over their assets and how to use them, meaning they can be tailored to what they consider most important. The family can enjoy highly-specific service, advice and confidentiality. Due to the level of control, family offices are adept at changing the structure, focus and composition at the family’s will.
The presence of several leading players in wealth management means Guernsey can cater to all the needs of a family office in one place.
Guernsey offers numerous advantages for basing a family office – a highly-sophisticated jurisdiction for trusts, foundations and companies, with advanced legislation and judicial oversight. The presence of several leading players in wealth management means Guernsey can cater to all the needs of a family office in one place.
Structures available include a private trust company (PTC), which may act as one or more trusts, normally administered by a local corporate service provider. In this sense, it is not a true family office as it does not have the independence associated with them.
The next level is to consider a standalone structure with a holding purpose trust or foundation at the top to hold the PTC, which acts as trustee for the underlying trusts. This type of structure is the most typical in Guernsey and offers the same benefits as a PTC, plus a bespoke level of assistance from a local corporate service provider (CSP).
Large structures are particularly stand-alone, usually separately licenced by the Guernsey Financial Services Commission, with their own dedicated administrators. These are fewer and tend to have less interaction with other CSPs as they are more self-sufficient. They may also cater for more than one family at a time, where those families’ interests are aligned.
Several local providers also offer Guernsey international pension and retirement benefit schemes, both offshore and onshore, particularly favouring the expat market in many jurisdictions. Guernsey can offer both approved and unapproved variations, with similar schemes operating under contract or trust, without prejudicing its tax-neutral status in Guernsey.
The flexible nature of Guernsey international schemes is such that these tend to be utilised more as retirement saving schemes, rather than purely as pensions, and can therefore provide opportunities to benefit outside of the typical lump sum annuity arrangement.