What is a Family Office?
A Family Office provides administrative, logistical and advisory support to families requiring assistance with their financial and business affairs. Many Family Offices start small, usually in order to address a pressing wealth management need, and over time they can grow to accommodate other services the family requires to optimise its affairs. The office with its administrative team can either be dedicated to the affairs of one family or certain duties and responsibilities can be outsourced to specialist providers and advisors.
Effective family wealth management encompasses a range of issues related not only to business aims, but also to personal and family goals. Wealthy families often consider establishing a family office to manage their many investment, reporting, philanthropic, and financial planning responsibilities. Properly structuring and staffing a family office requires an analysis of tax and governance considerations, juxtaposed with a thorough understanding of the family’s short and long range business and professional goals and objectives. To this end and by way of example, moving wealth to trusts for the benefit of spouses and/or children—even during one’s lifetime—can have significant estate tax planning benefits and can protect the specific assets (and appreciation) not only from estate taxes but also from creditors. Trusts (link to section on Trusts), when properly drafted, can provide effective and ongoing protection for the assets of the family with very flexible investment and distribution options.
Every family that has accumulated significant wealth should consider integrating current and future planning strategies utilizing trusts. Trusts have been time tested like no other risk management tool. However, not every trust provides optimum risk management protection. Specific provisions and terms are required to insulate the assets contained therein from claims of creditors. Increased mobility among high net-worth individuals and families has coincided with the broad expansion of a globally integrated economy — featuring greater cross-border trade and investment — to create an increasingly complex range of global tax issues.
|Most common forms of Family Office|
|The Single Family Office||Set up, owned and managed for one family. The original and most expensive model, favoured by the most wealthy and globally active families|
|The Multi-Family Office||Serves more than one family, with the families usually being linked commercially or by common values. Easier to attain economies of scale, so costs can therefore be shared more broadly and it may be easier to hire and retain top professionals|
|Commercial Family Office Providers||Businesses specialising in the provision of Family Office services – usually private banks, wealth management firms and high calibre professionals.|
Family Offices are not generally profit centres, therefore the costs have to be weighed against the benefits. “Protection” usually features in a family’s immediate driving needs to establish the office – protection from taxes, the effects of the patriarch’s eventual demise, dissipation of wealth by family members or from political and external threats. The absolute costs of maintaining an office can also be mitigated by other savings and services which the family office will deliver. The viability is therefore determined more by the family and the value it attaches to the solutions for the immediate problems it faces.
The rise of new industries, such as the financial services industry, is a crucial factor in the unprecedented growth of “new wealth,” inevitably drawing attention to the individuals who have succeeded in building up these fortunes. On the other side of the private wealth spectrum is old wealth, created by previous generations and passed down to succeeding generations. Families, as wealth creators, owners and subsequently investors, often tend to take an entrepreneurial standpoint in running their companies and other financial assets. Nevertheless, given the rising complexity of the financial markets, non-family managers are increasingly playing a fundamental role in their businesses and financial interests. This phenomenon has also led to the establishment of an entity involved in the managing of the family’s financial interests – the family office.
Often, family offices require holding companies in different jurisdictions or a combination of structures around the globe. In a not so distant past, family offices were always located close to or in the same region where the family lived. Nowadays, families themselves are far more widespread as indeed are their investment interests and commercial pursuits. Tax planning can indeed be a pertinent consideration when to decide where companies locate their head offices. The same applies to family offices. It is therefore crucial for the family office to be accessible and in a convenient time zone. If the family office is run in conjunction with the family’s private trust company, this can be a strong influencing factor too. Confidentiality and access to the required expertise are also key factors. To this end Malta provides an ideal platform from which a family office can be effectively operated. Local practitioners offer a very high quality service at competitive international rates. Moreover Malta’s double taxation treaty network and the predominant use of the English language gives the island an edge over other popular jurisdictions. This is clearly emerging given that Malta is increasingly the jurisdiction of choice amongst wealth managers, family offices, high-net worth individuals and retirees. Given our favourable Malta residency and tax laws, innovative investment vehicles (including specialist funds regimes and trust companies), excellent legal and accountancy services all within the European Union, Malta has begun to appeal to a wide audience in this area.
What we Offer
WDM International can offer Malta estate and inheritance planning consultancy, assisting professional intermediaries in the structuring and management of their clients’ affairs. Our services are bespoke, client-driven and confidential. From the outset of a new relationship, WDM International places emphasis on ensuring we have a complete understanding of the client’s circumstances and requirements. WDM international also prides itself in ensuring that its services are tailored to each client’s specific needs. Our team has considerable Malta and multi-jurisdictional experience in the global estate and inheritance planning industry. Our services include company management, setting up of foundations, consultancy in relation to family office structures, setting up of trusts and trust consultancy. At WDM International clients come first.
WDM International’s professionals work closely with clients to address issues of Malta tax residency and Malta domicile and to assess the tax aspects of international investment opportunities. Through our international network, namely JHI, we provide multi-jurisdictional tax and estate planning advice, taking into consideration family mobility, wealth planning and preservation goals, the nuances of investing in specific countries and asset types, and the tax consequences to the family’s private business enterprises.
WDM International’s professionals can assist with family office design and set-up, family education and communications, charitable planning and private foundations, and structuring business investments. Our approach addresses both the family office as a business and the private client’s family wealth as an ongoing enterprise.