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Family Offices – A Growing Area Of Business In The Bahamas

Family Offices – A Growing Area Of Business In The Bahamas

25.09.19

As families try to gain greater control over their financial affairs, family offices have risen to play a vital part in the cohesive and coherent management of their business interests, along with the domestic and personal affairs of their members.

Although people are always wrangling over the kind of governance that family offices and their associated structures should have, there is no question that present political and regulatory conditions suggest that substance prevails over form. Anyone who wants to establish an offshore family office must take "permanent establishment" regulations (which govern fixed places of business which usually generate direct-tax liabilities in the jurisdictions where they are situated) and "controlled foreign company" (CFC) rules into account. He or she must also contend with rules that relate to tax, residency and immigration while overseeing and managing things competently.

How a family office can plan relations between the generations

A family office facilitates "generational planning," the means by which one rich generation plans the lives of a later one, and can avail itself of a broad variety of tools that help it do so. Trusts (stalwarts of common law practice) and foundations (structures originally established under civil law codes) have been developed with the explicit aim of helping people to plan the lives of others for decades and perhaps even centuries ahead.

The overseeing and management of family trusts or foundations can be placed in the hands of third parties who report to a family office. Alternatively, the family office may itself establish a that trust or group of trusts; equally, it can act as the founder or supervisory party to a foundation. A PTC commonly takes the form of a limited liability company and its board of directors can include members of the family in question as well as trusted advisors and independent third parties. Consequently, the family may retain a measure of control over the strategic management of the assets without prejudicing the validity of the underlying trust or foundation. If the family establishes the structure with an unlimited life-span, subsequent generations can help to govern it.

The Bahamas’ legislative and regulatory regime gives such people the opportunity to create effective and efficient structures for family offices that comply with financial regulations. Service providers (including financial institutions, lawyers and accountants), skilled professionals and staff are readily available in the islands.

The Bahamas' proximity and direct flights to major cities such as Miami, New York, Toronto and London, as well as the opportunity for families and their trusted advisors to take up residence and purchase property there, are highly advantageous for long-term strategic planning.

Linda Beidler-D’Aguilar | Partner
Glinton Sweeney O’Brien, Counsel & Attorneys -at—Law

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