A family office is a professionally managed organisation established to coordinate the wealth, investments, businesses and long-term affairs of a wealthy family.
It acts like the family’s private headquarters for financial management, succession planning and governance.
What does a family office do?
Its responsibilities may include:
- Managing family investments and cash flow
- Consolidating property, shares and other assets
- Coordinating trusts, foundations and holding companies
- Business-succession planning
- Estate and inheritance planning
- Tax, accounting and regulatory coordination
- Insurance and risk management
- Family governance and dispute prevention
- Philanthropy and charitable giving
- Educating the next generation about wealth
- Maintaining family records and reporting
A family office does not replace a Will, trust or foundation. It coordinates these structures and the professionals administering them.
Two common types
| Single Family Office | Multi-Family Office |
| Serves one wealthy family | Serves several unrelated families |
| Highly personalised | Shares professionals and operating costs |
| Greater family control | Normally more economical |
| Usually suitable for substantial and complex wealth | Suitable for families wanting professional services without establishing their own office |
The Securities Commission describes a family office primarily as an investment office for ultra-high-net-worth families. SC—Single Family Office Scheme
Malaysia’s Single Family Office Incentive Scheme
Malaysia has introduced a formal Single Family Office Incentive Scheme associated with the Forest City Special Financial Zone in Johor.
The formal structure generally involves:
- A Single Family Office Management Company that manages the family’s investments; and
- A related Single Family Office Vehicle that holds the family’s assets and investments.
The participating companies must satisfy ownership, location, asset, expenditure, staffing, investment and other conditions.
The principal incentive is a 0% concessionary tax rate for the qualifying Single Family Office Vehicle for up to 20 years, subject to continuing compliance and approval. It is not an automatic exemption merely because a family establishes a company. Securities Commission Malaysia—SFO Incentive Scheme
Family office compared with a trust
| Family office | Trust |
| Manages and coordinates family affairs | Legally holds and administers specified assets |
| Provides investment, governance and administrative services | Trustee owes duties under the trust deed |
| May employ advisers and family-office professionals | Protects and distributes assets for beneficiaries |
| Does not itself automatically provide estate protection | Can form part of an estate and succession plan |
A well-structured wealthy family may use both:
Family Office + Family Trust or Foundation + Holding Companies + Will + Family Constitution
Who may need one?
A family office may be appropriate where the family has:
- Substantial investment assets
- Several businesses or properties
- Assets in different countries
- Multiple generations of beneficiaries
- Complex succession requirements
- A need for centralised reporting and governance
- Significant philanthropic objectives
For many families, however, a properly designed Will, trust, business-succession plan and coordinated team of advisers may be more cost-effective than establishing a dedicated family office