Family Office Singapore: A Comprehensive Guide to Setting Up and Managing Family Wealth

As Asia grew in prominence as a world-class destination for global investment and business in recent years, Singapore started attracting high-net-worth foreign investors. While China still leads in this area, with the second-largest number of billionaires worldwide, Singapore has seen a 7.6% increase in high-net-worth individuals.

To keep these investors interested in the country by offering them investment opportunities and assuring them of their family legacy, the family office concept in Singapore is essential. In this article, we have gone into the details of setting up a family office in Singapore, including asset management, establishing a family charter, licensing requirements, etc.

Key Points

• Establishing a family office in Singapore provides high-net-worth individuals and ultra-high-net-worth individuals with a stable, tax-efficient environment for managing family wealth. This is because a family office lets you leverage favourable tax schemes like Section 13O and 13U.
• Customising services such as wealth management, estate planning, and lifestyle management ensure that a Family Office Singapore meets the unique needs of each family.
• Optimising tax strategies through Singapore’s tax incentives and compliance with the Income Tax Act maximises asset growth and minimises tax liabilities for family offices.
• Leadership and organisational structure are crucial for the success of a family office in Singapore, as it requires experienced professionals to manage the complexities of family wealth.

Introduction to Family Office Singapore

The Singapore family office has become an essential part of maintaining generational wealth as the country has emerged as a leading destination for high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI). The city-state’s political and economic stability, favourable tax policies, and world-class financial services infrastructure make it an ideal location for managing and preserving family wealth across generations.

A family office in Singapore serves as a comprehensive, bespoke solution for managing a family’s financial and non-financial affairs. From wealth management and estate planning to personal concierge services and educational programs for the next generation, a Singapore family office can fulfil the unique needs of each family. Its services are tailored to suit different aspects of managing assets.

Importance of Family Offices for High Net Worth Individuals (HNWI)

For HNWIs and UHNWIs, managing substantial wealth involves more than just making investments; it requires a strategic approach to ensure the longevity and growth of the family’s assets. Family offices provide a centralised management system that handles everything from budgeting and tax planning to investment management and succession planning. It also includes taking care of philanthropic endeavours and lifestyle management for wealthy families.

One of the key benefits of a family office is its ability to preserve family wealth while fostering unity and shared values in members of the same family. The Singapore family office can ensure that your family’s legacy is maintained for generations to come by aligning the family’s financial goals with its cultural and philanthropic values.

Additionally, family offices facilitate succession planning through various strategies, such as utilising trust structures to protect assets. This ensures that the assets are passed on to the next generation under specific terms and conditions, eradicating any chance of exploitation or misuse.

Step-by-Step Process for Setting Up a Family Office in Singapore

Setting up a family office in Singapore involves several steps, each of which requires careful planning and consultation with investment professionals. Here’s a detailed guide to the process:

1. Establish Your Family Charter

The first step in setting up a family office is to form a family charter that serves as the foundation of the office. The charter should outline your family’s goals, values, and long-term vision. It’s essential to involve all key family members while formulating the charter so that everyone’s interests are represented.

2. Decide Which Assets Will Be Managed

The next step is to determine which assets will be managed by the family office. This should include investments in stocks, real estate, private equity, and even fine art. Each asset class has different tax implications, so it’s crucial to work with a family office service provider to optimise asset management strategies.

3. Select the Services Your Family Office Will Provide

Family offices can offer a wide range of services, including financial planning, tax advisory, legal services, wealth management, wealth planning, property management, and more. It’s important to customise these services based on the specific needs of your family.

4. Structure the Leadership of Your Family Office

Choosing the right leadership team is critical, as it ensures easy and efficient management of the complexities. While you may consider hiring trusted individuals from your personal network, it’s advisable to seek professional guidance from experts like investment professionals.

5. Draft Your Family Office Business Plan

A well-crafted business plan is essential for the successful operation of a family office. This plan should outline the family office’s legal structure, strategic objectives, governance structure, and operational processes.

6. Set Up Pro Forma Budgeting

Budgeting is another key aspect of any family office. Pro forma budgeting helps establish a framework for future financial planning and ensures that the family office operates within its financial means.

7. Optimise Your Family Office for Tax Efficiency

Singapore offers several tax incentives for family offices through its tax incentive scheme, including the 13O and 13U, which provide funding for vehicles if you have at least S$20 million and S$50 million of assets under management, respectively. 

Additionally, the family office must employ two investment professionals to take advantage of the 13O scheme and three investment professionals for the 13U scheme. In both cases, at least one of the investment professionals has to be a non-family member. Furthermore, you must abide by the minimum spending requirement of S$200,000 for both. 

These schemes can significantly reduce the tax burden on the family office, making it an attractive location for wealth management.

8. Recruit the Necessary Staff

Depending on the services offered by your family office, you may need to recruit a team of professionals, including financial advisors, legal experts, and administrative staff. Your family office service provider can assist with the recruitment process. This ensures that you have the right family office development team in place.

9. Organise the Operational Infrastructure

Setting up the operational infrastructure of your family office involves everything from IT systems and cybersecurity measures to office space and communication tools. These elements should be in place for the smooth operation of family offices in Singapore.

10. Ensure Long-Term Stability

With your Singapore family office fully established, you can rest assured that your family’s wealth is being managed in one of the world’s most stable and prosperous regions. Singapore’s robust financial sector, coupled with its high quality of life, makes it an ideal location for preserving and growing family wealth.

Legal and Regulatory Considerations

Singapore has a well-established regulatory framework that supports the establishment and operation of family offices. It is important to work with legal experts who are familiar with Singapore’s laws and regulations to ensure compliance and avoid any legal pitfalls. The Monetary Authority of Singapore (MAS) plays a crucial role in administering investment schemes and licensing requirements. It creates a structured environment for financial activities and compliance of the family office community.

To set up a family office in Singapore and avoid legal and tax implications, you need to fulfil the following regulatory requirements:

• Licensing Requirements: Depending on the scope of services offered by the family office, certain licenses are required, such as those for providing financial advisory services. Multi-Family Offices (MFOs) are regulated under the Securities and Futures Act, while Single Family Offices (SFOs) are exempt.
• Data Protection: Family offices must comply with Singapore’s Personal Data Protection Act (PDPA) to protect the privacy and security of client information.
• Anti-Money Laundering (AML) Compliance: Family offices in Singapore must adhere to strict AML regulations to prevent the misuse of financial systems for illegal activities.

Tax Benefits and Optimisation Strategies

Singapore’s favourable tax regime is one of the primary reasons why HNWIs choose to set up family offices in the state. The key tax incentives provided under various tax incentive schemes are designed to attract wealthy individuals. This includes:

• Section 13O and 13U Schemes: These schemes provide tax exemptions on certain income generated by family office fund management, like funding for vehicles. To qualify, the family office must meet specific criteria, such as local spending requirements and minimum assets under management.
• Double Taxation Treaties: Singapore has an extensive network of double taxation treaties with over 80 countries, which helps minimise the tax burden on international investments.
• No Capital Gains Tax: Singapore does not impose a capital gains tax, making it an attractive destination for investment management.

Family offices, with the help of tax advisors and legal experts, can maximise these tax benefits and minimise liabilities, which is beneficial for family businesses.

Services Offered by Family Offices

Family offices in Singapore offer a wide range of services that can be customised to meet the specific needs of the family. This includes:

• Wealth Management: Investment planning, portfolio management, and asset allocation.
• Estate Planning: Structuring of wills, trusts, and other mechanisms to ensure the smooth transfer of wealth across generations.
• Tax Advisory: Optimisation of tax liabilities through strategic planning and compliance with local and international tax laws.
• Philanthropy: Management of charitable activities, including the establishment and operation of private foundations.
• Lifestyle Management: concierge services, travel planning, and personal security.

Additionally, multi-family offices manage the combined assets of multiple wealthy families, offering shared costs, collaboration, and comprehensive wealth management services tailored to each family’s unique needs.

Each of these services is tailored to suit your family, ensuring that all aspects of your wealth and lifestyle are managed effectively.

Structuring and Staffing Your Family Office

The family office structure can vary depending on the family’s needs and the services offered. Family businesses often play a crucial role within these offices as they contribute to the unique dynamics and management roles. Common family office structures include:

• Single Family Office (SFO): Single-family offices serve only one family and are fully customised to meet their specific needs. They offer the highest level of privacy and control but might need significant resources to operate. Single-family offices are particularly popular among ultra-high-net-worth individuals (UHNWIs) and wealthy families due to their tailored investment strategies and tax incentives.
• Multi-Family Office (MFO): An MFO serves multiple families, offering shared resources and services. While it may be more cost-effective, it might not provide the same level of customisation as a single-family office.

Staffing your family office involves hiring professionals with expertise in finance, law, tax, and administration. The leadership team, including the CEO and CIO, plays a crucial role in guiding the family office’s strategy and operations.

Maintaining Operational Infrastructure and Security

The operational infrastructure of a family office is critical to its success. This includes:

• IT Systems: Robust IT systems are essential for managing financial transactions, private banking, maintaining records, and ensuring smooth communication between staff and family members.
• Cybersecurity: Protecting sensitive financial and personal data from cyber threats is a top priority for family offices. Hence, they need to implement strong cybersecurity measures to safeguard the family’s assets and privacy.
• Office Space: The physical office space should be equipped with the necessary facilities and technology like high-speed internet, AI tools, etc. to support the family office’s operations.

Maintaining a secure and efficient operational infrastructure ensures that the family office can operate smoothly and respond to any challenges promptly.

How InCorp Can Help

Setting up a Singapore family office is a complex but rewarding process that requires careful planning and consultation with professionals. From establishing a family charter and selecting services to company registration, and optimising for tax efficiency, each step is crucial for long-term success. Additionally, you have to consider your employees’ visa options during this process.

InCorp’s expert team is ready to help you make your move to the safe shores of Singapore for your family office. Our accountants, lawyers, bankers, and HR specialists all have extensive experience in family office planning and implementation, so no detail is too small. 

We also understand that your family office is not just about wealth management—it is about ensuring that your children and their children have the tools needed to thrive in an uncertain future. We are eager to work with you to achieve that goal and more.

About the Author

InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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