To meet investment and wealth planning needs of high-net-worth individuals and wealthy families, Season Capital provides a full range of family office services, covering investment management, asset structuring, tax planning and charitable donations. Based on Season Capital’s financial knowledge and institutional network, we collaborate with a team of professionals across legal service, family trust, private banking, insurance, investment management, real estate and tax consultants. Our goal is to solve problems for families.
Family Office is a private wealth management and consultancy serving High Net Worth Individuals (HNWI). Family offices are different from wealth managers. Their services are not limited only to investments, but also comprehensively cover financial accounting and legal aspects of family management. For example, family offices offer solutions such as family trusts, insurance, charity organization, inheritance, wealth transfer and tax planning.
Family offices are usually classified as Single Family Office or Multi Family Office (MFO). A single family office only serves one single wealthy family, while an MFO is an institution that serves multiple wealthy families at the same time. MFO is more common for its economic benefit through cost sharing.
A family office is the financial manager of a wealthy family, offering a wide range of services from investment management, structuring, to tax planning and charitable donation. The scope of services spans across various professions, far beyond capabilities of any single professional consultant. Therefore, the family office will use its industry expertise and network to team up with other professional teams such as legal, trust, private banking, insurance, investment management, real estate and tax advisors.
The family can authorize the family office to be the manager of investment portfolio, including stocks, bonds, ETFs and mutual funds. Through this EAM model, the family office can manage investments under a designated private bank platform.
Before hiring a family office manager, family decision makers should consider the following:
• What is the purpose of establishing a family office?
• What is the vision and goals of the family investment?
• The family’s tolerance and preference for investment risk?
• How to effectively reduce the tax burden of family investment income?
• What are the directions and strategies for family wealth inheritance?
• How to preserve family spirit and culture through family office?
Effective asset structure design can not only protect family assets, but also facilitates wealth inheritance. Family founders, who have built up a lifetime of wealth, will face challenges when it comes to wealth inheritance. There are issues to consider such as estate taxes, estate law, family relationships and business continuity. Given this complexity, a comprehensive plan must consider all aspects of family wealth management, including the transfer or management of business interests, the disposition of estates, the management of family trusts, charitable aspirations and continuity of family governance.
For the sake of wealth inheritance and protection, the family office will design investment structure solutions, such as setting up a Family Trust in conjunction with fund structures to hold various types of assets. Family trust is a safe and secure legal structure. Upon a trust deed is duly signed between the Settlor and the Trustee, the Trustee can manage and distribute the assets to the Beneficiaries according to the settlor’s instructions.
The family trust can contain additional structures such as private funds and life insurance for achieving specific needs such as wealth inheritance, asset isolation and confidentiality.
Under the FATCA and CRS regulations, countries around the world have established information exchange mechanisms, making it more difficult for tax evasion through offshore structures. Popular immigration destinations, such as the United Kingdom, Canada, Australia and the United States, have all implemented global income taxation policies.
Therefore, tax residence and asset allocation planning is essential to mitigate tax liabilities. The family office must plan to allocate and transfer assets legally, before family members are committed to the new immigration status. An optimal investment structure is designed for effectively reducing future tax expenses.
With all due respect, legal protection of personal property rights must be considered a top priority. Astute wealthy families plan ahead by allocating family assets and using family trusts or charitable trusts to segregate assets.
1. Asset Segregation: After trust inception and asset transfer, assets under the trust are then segregated from the settlor, trustee and beneficiary. The trust is regarded an independent entity, forming a “firewall” that cannot be sealed, frozen or disposed of.
2. Tax Saving: Through distributing income to family members with lower tax bracket, or delaying major tax events such as trust asset distribution to the beneficiaries, trustee can enact to reduce overall family tax burden.
3. Privacy Protection: Using a trust structure to hold company shares or real estate can form barrier such that outsiders cannot find out identities of beneficiaries behind the trust. The details of the property distribution made by the settlor and the trustee are strictly confidential, that can protect junior beneficiaries and avoid external interference.
金融海嘯後，美國政府下定決心對富人海外追稅，於是推出了「海外賬戶稅收法案」FATCA (Foreign Account Tax Compliance Act)。參考對付瑞銀的招數，美國政府勒令全球金融機構，每年向美國稅務局申報美國稅務居民的外國賬戶信息，不配合的機構就受罰。鑒於美國在金融產業的影響力，FATCA得以在2014年在全球成功實施。
CRS (Common Reporting System) = 全球資產信息互通
參考FATCA的框架，世界經合組織OECD (Organization for Economic Cooperation and Development) 就創造了個全球版的FATCA，這個就是「共同申報準則」CRS (Common Reporting System)。CRS成員國之間實行信息互換，而香港屬於第二批CRS國家地區，於2018年開始進行了信息互換。到目前為止，CRS已經覆蓋超過170個國家地區，就像一張「天網」：簡單地說，哪個國家的納稅居民，其資產信息就被交回到自己納稅的國家。
經濟實質法 (Economic Substance Act) = 避稅天堂的消失
CRS推出後，在國際壓力下，傳統的避稅天堂紛紛推出了「經濟實質法」(Economic Substance Act)，並在2019年陸續生效。簡單地說，經濟實質法的目的，就是讓在當地註冊的公司必須申報「實質」從事的業務活動，若果這些活動並非在避稅天堂當地所產生的，就必須提供實質產生業務活動該國的稅務身份(Tax ID)證明，否則將被罰款和除名。這意味著，絕大部分的BVI公司將沒法享受BVI的零稅率，避稅天堂的功能就不復存在了。
在移民前或進行海外投資前, 投資人應提前做好規劃, 以避免移民身份或海外投資落實後, 產生很多本該可以避免的稅項。若投資人在移民海外或做海外投資前, 沒有充分的準備, 失卻了先機, 就得不嘗失了。