Wealth is increasing exponentially among some of the world's richest families to the extent that, for many of these families, it makes commercial sense to set up their own bespoke family office to look after their key operations – and they are increasingly looking to Guernsey as the place to do it.
At its most simple, a family office manages the affairs of a wealthy family (or in the case of a multi-family office, multiple wealthy families). The services typically provided include management of tax and legal matters, property management, accounting and payroll activities. In addition, some family offices provide softer concierge services connected with, for example, travel and managing household staff. Family offices also increasingly provide family management services, including:
- family governance;
- financial and investment education for the next generations;
- philanthropy coordination; and
- succession planning.
Why is Guernsey becoming a jurisdiction of choice for families across the world looking to set up such an operation? There are a range of factors, but a key one is global economic shifts, with private wealth increasing exponentially in East Asia and families in the Middle East looking to structure their assets in difficult times.
Alongside its political stability, Guernsey also has the expertise and personnel to manage family offices well:
Guernsey is particularly attractive because of the high quality of professional services available in the investment, accounting and legal sectors. A family office is only as good as those running it and the right mix is crucial - both in terms of providing for the key professional services needed by a family office (e.g. accounting, legal and investment services) and the softer skills required for diffusing difficult family issues and ensuring individual family members buy in to the family's vision for the future.
It is also likely that new economic substance provisions will influence where ultra-high-net-worth individuals locate their family offices – Guernsey is on the front foot here, affirmed by the European Union as a cooperative jurisdiction in terms of good tax practice and transparency. In addition, the desire among high-net-worth families to establish meaningful charitable legacies and structures, which the law in Guernsey easily accommodates, is another reason why it is becoming an increasingly popular location to establish a family office.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.