Wealthy and mobile families and their advisors often put quite a lot of thought into the ‘hard’ requirements of legal and tax planning for family fiduciary structures such as trusts, foundations, and underlying companies and partnerships – hard requirements are issues such as:
- selecting the governing law and jurisdiction based on legislative requirements in the relevant trust, foundation, company, or partnership law;
- ensuring the tax, fiduciary (eg: does my PTC need to be licensed?) and financial services regulatory regime (eg: does my family office vehicle need an investment licence?) in the relevant jurisdiction that is selected works; and
- the same considerations in the jurisdiction of any settlor, beneficiary or protector (is it on a blacklist, what is the tax treatment and are there any double tax agreements that are relevant, investment protection treaty availability, issues around forced heirship, a community of property, asset protection etc).
Whilst the hard requirements are important, all too often the emphasis on them puts softer considerations of jurisdictional selection down as a second thought. However, these softer issues can be very important to the family office. So what are the soft considerations? They include the following (in no particular order), with different weights being applied by a family depending on their priorities: