How to Set Up a Family Office in Singapore?

In recent years, Asia has established itself as an exceptional location for global business and investment, and the region's population of high net-worth individuals (HNWI) has increased by 7.6%. In addition, the pandemic has shown many wealthy families the necessity to reassess their plans to better prepare for future uncertainties. With great wealth comes great responsibility.?

Setting up a family office in Singapore can be a complicated procedure, but with proper planning and execution, it can give considerable benefits for high-net-worth families looking to efficiently manage their money and financial affairs. A family office is a private organization that administers the investments, financial planning, and other wealth-related operations of a single or group of wealthy families. Singapore is a popular location for establishing a family office due to its excellent business environment, political stability, and powerful regulatory framework.??

If you are still confused about what is a family office and why should you choose Singapore as your location to establish one, then you can refer to our previous article. Through this piece, we will show you step-by-step guidelines on how to set up a family office in Singapore.??

Step 1: Define Your Objectives and Structure. Before setting up a family office, it's essential to define your objectives and determine the structure that best suits your family's needs. Family offices can be structured as either single-family offices (SFOs) or multi-family offices (MFOs). SFOs serve a single affluent family, while MFOs serve multiple families. Consider factors such as the size of your family's wealth, the complexity of your financial affairs, and the number of family members involved in the decision-making process when deciding on the structure of your family office.?

Step 2: Choose the Right Legal Entity. In Singapore, family offices can be set up as either a company or a trust. The choice of legal entity will depend on various factors, including the family's preferences, tax considerations, and asset protection requirements. If you choose to set up a company, you can register either as a private limited company or a public limited company. If you opt for a trust, you can establish a discretionary trust or a fixed trust, depending on your family's needs and objectives.?

Step 3: Seek Professional Advice. Setting up a family office involves navigating complex legal, tax, and regulatory requirements. It's crucial to seek professional advice from qualified experts, such as lawyers, accountants, and financial advisors, who are well-versed in Singapore's regulations and laws. They can help you understand the legal and tax implications of setting up a family office, assist in drafting the necessary legal documents, and ensure compliance with all relevant laws and regulations.?

Step 4: Obtain Necessary Licenses and Permits. Depending on the activities your family office will engage in, you may need to obtain licenses and permits from relevant authorities in Singapore. For example, if your family office plans to provide financial advisory services or manage funds, you may need to obtain licenses from the Monetary Authority of Singapore (MAS). It's crucial to research and understand the regulatory requirements applicable to your family office's specific activities and obtain the necessary licenses and permits to operate legally in Singapore.?

Step 5: Establish Proper Governance and Compliance. Establishing robust governance and compliance frameworks is essential for the smooth operation of a family office. This includes setting up a proper system for financial reporting, internal controls, risk management, and compliance with relevant laws and regulations. You should also define the roles and responsibilities of key personnel, including family members, employees, and external advisors, to ensure effective decision-making and accountability within the family office.?

Step 6: Set Up Banking and Accounting Systems. As part of the family office setup process, you will need to establish banking and accounting systems to manage your family's financial affairs effectively. Open bank accounts in Singapore with reputable banks that cater to family offices and provide comprehensive wealth management services. Set up proper accounting systems to keep track of financial transactions, prepare financial statements, and comply with tax reporting requirements.?

Step 7: Implement Wealth Planning and Estate Planning Strategies. Work with professional advisors to implement wealth planning and estate planning strategies that align with your family's goals. This may involve setting up trusts, creating a succession plan, and managing intergenerational wealth transfer. Proper wealth planning and estate planning can help protect and preserve your family's wealth for future generations.?

Step 8: Recruit your family office personnel to optimize your fund tax exemption scheme. Singapore is well-known for its Onshore (Singapore Resident Company) Fund Tax Exemption Scheme (also known as 13R) and Enhanced Tier Fund Tax Exemption Scheme (commonly known as Section 13X), which allow firms to effectively pay no tax on certain income. This can also be accomplished via a Singapore family office; however, various considerations must be made, such as recruiting local staff, investment prerequisites, and local spending on goods and services. Consult with your family office service provider to determine the best arrangement.??

Your family office service provider can recruit, shortlist, and eventually hire your complete workforce, depending on the services you choose for your family office. You may have a dedicated team of bankers, lawyers, or even travel agents in a matter of weeks.?

Step 9: Review and Update Regularly. Regularly review and update your family office's governance framework, investment strategies, wealth planning, and estate planning strategies. Stay updated with changes in laws and regulations in Singapore and adjust your family office's operations accordingly.?

In conclusion, setting up a family office in Singapore requires careful planning, compliance with relevant laws and regulations, and the engagement of professional advisors. By following these step-by-step guidelines, you can establish a well-structured family office that effectively manages your family's wealth and financial affairs.?

Oakwood comes to recognize that a family office is more than just wealth management; it's about providing your children and your next generation with the resources they need to succeed in an unpredictable future such as the pandemic Covid19. Yes, we agree that a pandemic is something we cannot predict but without taking any precautions, it will lead to serious damage to the generation. Therefore, we are excited to collaborate with you to reach that goal and assist you in relocating your family office to the secure shores of Singapore. Reach us at +65 8940 3532 (Kelly) anytime. ?