Family Wealth Management
Family wealth management services is a tailored wealth advisory service that combines other financial services to address the needs of wealthy clients.
It is a consultative process whereby financial advisor who utilizes the spectrum of financial disciplines available, such as financial and investment advice, legal or estate planning, accounting, and tax services, and retirement planning, to tailors a bespoke strategy and manage an affluent client’s wealth for one set fee.
In the international Private wealth management world, ultra-high-net-worth(UHNW) family having $30 million or more in investable assets, pay wealth-management professionals to help them on taxes planning, keep their fortune out of the hands of creditors, litigants, divorced spouses, and disgruntled heirs and other obligations.
Vulnerable to lawsuits or have a potential divorce ? Have a wealth manager put your fortune into a Cook Islands asset-protection trust like the wealthy families of the world have done.
In effect, such trusts make the wealthy family fortunes immune from the application of inconvenient national laws. No litigant on earth has been able to break a Cook Islands trust. As the assets are no longer in individual name and can’t be attached in a judgment and made it effectively judgment-proof.
Managing Your Wealth with Family Office
As there are more multi-millionaires emerging, there is a growing trend among Ultra High Net Worth Individuals (UHNWIs) to have a specialised Family Wealth management Services through a Family office.
This office consists of dedicated full-time professionals like legal, tax expert, investment specialist and financial advisor to handle and manage the family ’s business, wealth, personal and corporate affairs.
A family office can be built around the individual and very specific needs of the UHNWI and his family. For example, carry out duties like: administer the businesses and private holdings of the family; tax and succession planning; legal advice; management of investment portfolios and real estate holdings; act as a trustee; to supervise businesses of the family.
A very successful example of family office can be traced back to Mitsui family of Japan, that has a family office structure to preserve the family fortune for almost 3 centuries.
The family constitution with clear vision and guiding principles of the Mitsui family, was established in 1722 and the entire business of the Mitsui family was under the control of a single family council.
Guided by the founder’s advice to “employ professionals of great abilities”, the Mitsui family wealth management services make their businesses flourished generations after generations.
The family office may be structured in several ways. A common and simple structure is a limited liability company which may act as the trustee of an umbrella master trust with sub-trusts. The family office can thus become an asset holding company that owns the businesses of the family and other investments through various legal structures.
The Protected Cell Company (“PCC”) concept is another good corporate vehicle. This will enable the building of individual asset allocations across a variety of asset classes tailored to specific groups within the family, while at the same time preserving the independence of each group.
Protecting Your Wealth with Trusts
A trust creates a legal relationship among three parties. 1st party, we call the settlor or grantor . 2nd party – the trustee, the right to hold the title to property or assets. The trustee does this for the benefit of the 3rd party, the beneficiary.
Protecting your assets and privacy
It is always a good idea to separate yourself from your assets as it protects them from any future claims made by creditors or a lawsuit for legal protection.
Trusts come in various forms.
- A living trust holds assets during an individual’s lifetime and usually manages and distributes them, in whole or in part, after death.
- A testamentary trust specifies how an individual’s assets will be used after their death.
- The ‘discretionary trust’ is one of the most popular trust for the purposes of asset protection. In this instance, the grantor/ settlor may be a protector of the trust as well as a beneficiary, but he can’t be a trustee and he must not be the sole beneficiary. He benefits from the assets, but doesn’t own them, which puts them beyond the reach of creditors.
Trusts can either be revocable, and thus changed or terminated by the grantor/settlor or grantor during his or her lifetime, or irrevocable, and thus unchangeable.
Though, in certain jurisdictions, such as the Cook Islands, a grantor/ settlor can request that the trustee makes certain changes even if the trust is irrevocable. Most trusts are funded, where the assets are placed into it during a settlor/ grantor’s lifetime, but some are unfunded agreements that become funded upon the grantor’s death eg insurance trust.
The name of the trust will usually be completely unconnected to the grantor/ settlor’s name, affording him total privacy, and the documents which govern the trust will be confidential.
Estate planning
Another common use is for estate planning; that is, to ensure that assets are distributed according to the settlor or grantor’s intentions, save time in the transfer of assets to heirs, and sometimes reduce inheritance or estate taxes.
Tax planning and benefits
Establishing a trust is a very good way of maximising income from your assets and the tax consequences of a trust are very favourable.
For example, any trust domiciled in Labuan Malaysia enjoys the same tax benefits as other business entities on the island:
- Income derived from holding investment activity is tax exempt
- The Exchange Control Act 1953 does not apply to a Labuan trust
- There are no withholding taxes on the income distribution to the beneficiaries of a trust
Usage and purpose of offshore trust
- Keep the wealth and money in the family, in the form of estate and succession planning
- Act as “family bank” to preserve the wealth for the family and the future generations.
- Prevent a spendthrift child from squandering the inheritance by establishing a certain structure
- Save potentially a large sum of inheritance and estate tax
- Set up a life insurance trust to preserve wealth and any proceeds will not be taxable
Protecting Your Wealth with Foundations
Foundation is defined as an independent self-governing legal entity, set up and registered or recorded by an official body within the jurisdiction of where it is set up.
Purpose of foundation is to hold an endowment asset provided by the Founder and/or others for the benefit of Beneficiaries which are usually not engaged directly in commercial operations, and which exists without shares or other participation.
Private operating foundations run the organizations that they fund with the income from their investments.The the foundation’s own board of trustees or directors manage the funds and programs within the foundation.
In different countries, such as Nevis and the Cook Islands, one can continue to invest in and receive funds from a foundation.
Benefits of Foundations or Trusts
There are several benefits that foundations and trusts enjoy. Both trusts and foundations are flexible arrangements.
They are both run on the discretion of the trustee or board, which determine how the benefits are distributed and when according to the grantor/ settlor or founder’s intentions.
The grantor/ settlor of a trust or founder of a foundation can choose to reserve some powers and rights in maintaining their intentions, or in vetoing decisions made by the trustees or board.
There is no duration set by law for either trusts or foundations, and they can be set up to last for an unlimited amount of time. This makes either attractive options for dynasty private wealth structures, as they can hold family wealth for many generations.
People can create trusts and foundations for individuals based on private arrangements. Privacy is an important aspect in both investment types.
While some information about foundations is required to be publicly available, there is no requirement to identify the founder, beneficiaries, or purpose of a foundation publicly. Trusts do not require any registration of documents or information in the public domain.
Discuss with us to setup your Family Office, Foundations or Trusts
In a rapidly globalising world, the needs of wealthy families become more complicated.
This complexity requires to “professionalise” many informal arrangements, including employing “professionals of great abilities”.
Family Wealth management Services via family office can provide the most flexible, responsive and tailor-made solution to the family’s financial, corporate and personal needs.
Wealth in itself can provide absolute personal freedom, mobility, privacy. However money itself does not make this freedom attainable, but the application of financial-legal expertise does.
Hence the wealthy family need to create the asset-protection trusts and offshore corporations for planning debts and taxes, and the inheritance to make sure that wealth stays in the family, generation after generation.
Opulent Capital International Group works with multiple trade platform providers, wealth managers and financial advisory firms to help our high net worth clients to increase their investment portfolio return, setup foundation or trusts with a focus on growth, distribution.
