BY ROGER FRICK.
An internationally located and worldwide active wealthy family searches Family Office services in countries, where, besides the political and economic stability, it experiences that kind of professionalism, which is necessary to build up mutual trust, often lasting for generations, as well as a relationship network, which guarantees its legal and planning security with reference to asset protection and succession planning. Furthermore, those families are in search of understanding and accompaniment while transferring the assets to the next generation and answers to its planning efforts with respect to provision for age and health.
A professional Family Office renders for its customers, either with its own staff or by including external experts, services like asset planning, inheritance planning and succession planning, enterprise sales, administration of assets, tax consultation and legal advice, coordination of the charitable activity of the family and a lot more. According to the specific needs of a family, the services of a Family Office can also include the administration of the properties, yachts, airplanes or also art collections, which are in the possession of the family. Further, Family Offices, when required, also look after personal affairs of the members of a family, like the reservation of trips, assistance in selecting schools abroad, processing of private post, in short, all private matters.
Basically, two types of Family Offices are distinguished: Single Family Offices or Multi Family Offices. A Single Family Office looks only after one single family with a property of about 500 million Swiss Francs, which also bears the costs occurring for its Family Office. The employee number of 4 to 8 employees is manageable, whereby the employees are selected and controlled by the respective family. Contrary to it, a Multi Family Office works simultaneously for several families with liquid assets from 25 million Swiss Francs. Multi Family Offices have up to 25 employees and are not controlled by a certain family, since they are usually owned by the key persons and partners.
In today's world of increasing transparence and cooperation between the countries, an increasing gap stands out between the expectations in property structuring with respect to the maintenance of personal control / influence, on one hand, and discretion / confidentiality as well as effectiveness on the other hand. Noticeably, these two expectations are contradictory. However, a professional Family Office advisor knows how to take care of the cultural circumstances of such expectations, listens and justifies the trust of his customers, when he represents their interests reliably and responsibly. Based on the expectations of his customers, he will offer tailor-made solutions in context of the Family Office support.
Internationally operating families are more and more faced with the fact that one and the same property structuring can be more effective for a family, which operates internationally, than when a family lives exclusively in one country and is working there. Here, an elbowroom arises, which does not open for families or members of the families, who do not change the residence. An example can be given, that a member of the family, who moves to Switzerland with a tailor-made trust or a tailor-made foundation achieves that the assets and yields are not attributed to the person residing in Switzerland, which opens enormous elbowroom for planning.
Liechtenstein financial products, that means foundations, trusts, trading companies like for example corporations or the company forms specific to Liechtenstein like the establishments or registered trusts, are interchangeable, at the first sight, with structures of other jurisdictions. What, however, is not interchangeable is the 88-year-old experience of the financial center of Liechtenstein in the international trust and company law fields, which started to develop already in 1926 with the introduction of the Liechtenstein personal and company law. Substantial key elements of the financial center of Liechtenstein are the customs agreement with Switzerland of 1924, the takeover of the Swiss franc as a legal currency in the following year as well as the entry in the European Economic Area (EEA) in 1995, which enabled the simplified access to foreign markets. At the same time, the affiliation with the EEA ensures that the regulation of the financial center of Liechtenstein is according to the European standards. These factors in combination with the professionalism and the expert knowledge of the Liechtenstein financial intermediaries are the guarantor for a comprehensive customer care.
This professionalism permits to design the products, thereby making use of all law-compliant possibilities, which the international trust and company law offers, in such a way that they correspond to the individual needs of a family, irrespective of whether the choice is, e.g., a foundation from Liechtenstein or Panama. It is important to recognize the needs in context of the Family Office support and to work on them in context of an interdisciplinary discussion. Depending on the services offered, a Liechtenstein Family Office can work, as per its orientation in the form of a credit institute (bank), a security or investment firm, whereby attractive tax advantages are to be taken into consideration with respect to income tax and tax exemptions.
Further, it is also possible to obtain residence in Liechtenstein in special cases, what opens further planning potential.
Internationally operating families use, by rule, companies from different jurisdictions. However, they are often not aware how the foreign law regulates the succession, if the ownership rights are not held via foundations and trusts. An asset structuring via foundations and trusts fills in exactly this vacuum and ensures that the families do not experience legal surprises in the course of the succession planning.
Upon the establishment and administration of foundations and trusts, as well as of companies, the international developments must be considered, may it be in the context of double taxation agreements, OECD AIA (Automatic Information Exchange) / CRS (Common Reporting Standard), US FATCA (Foreign Account Tax Compliance Act) or the Multilateral Administrative Assistance Convention. It is important that an internationally operating family profits from a Family Office service, which takes these aspects into consideration.
Liechtenstein, which distinguishes itself, besides its very modern infrastructure, especially by the following advantages, namely by
• a safe economic and political sphere in the center of Europe
• a free turnover of capital and the Swiss franc as a stable currency
• an attractive taxation of natural and judicial persons
• a liberally formed company law
• an efficient bank system
• a high degree of discretion with concurrent observance of the international legal standards for the prevention of money laundering and organized crime, will meet this requirement most likely.
The wide range of qualitatively high-ranking products and services conforms to international standards, and Liechtenstein financial intermediaries are subject to a contemporary independent supervision.
Besides, Liechtenstein financial intermediaries are mostly multilingual and have detailed and long-standing knowledge in asset structuring processes, which covers the European continental legal field of “Civil Law” as well as also the Anglo-American legal field of “Common Law”. This multi-track orientation is also reflected by Liechtenstein law, the only European legal system until today, that belongs to the continental civil judicial system of Roman origin and that has taken over and regulated the trust (Trust Settlement, Private Trust or Trustees) as well as the American Business Trust. This is insofar noteworthy, since both concepts derive from the legal circle of Common Law and Equity, what also presents an enormous advantage, if a Family Office service should be rendered worldwide.
Since the number of very well-to-do families, so-called High-Net-Worth Families is increasing worldwide, the need for Family Office services increases continuously in Single Family Offices as well as Multi Family Offices. However, it is to be noted with respect to this, that the name “Family Office” is not protected in any way and that huge differences in quality are noted. Often even former bank employees or independent asset administrators become independent with a Family Office, whose services are then limited mostly to the administration of assets. Such Family Offices are often connected with participating banks and, hence, are not absolutely independent.
To sum up, it should be emphasized again, that a good Family Office support can give answers to questions with respect to legal, financial as well as personal consequences when moving to other countries, substance and offset regulations in various countries, effectiveness of structures, depending on how the statutes and by-laws look like or where the assets of these structures are. However, a high professionalism is always a basic prerequisite to do justice to the high expectations. Hence, wealthy families should make every effort in the careful selection of a suitable Family Office.
