Essential guide to setting up a family office in Jersey

Jersey has long been established as a secure, safe and stable jurisdiction for wealth management.

A significant number of family offices, both single and multi-family, are already set up in Jersey and there continues to be a large number of enquiries from both existing family offices wishing to relocate their seat of business to Jersey or set up branch offices in Jersey and from wealthy families seeking to establish a family office in the island for the first time.

This guide provides an overview of the key considerations and steps for setting up a family office in Jersey, ensuring a seamless transition and operation.

Why Jersey for a family office?

Family governance remains a key consideration for many people, with clients wanting a safe harbour for their assets in a reputable jurisdiction with certainty around asset protection.

There is little doubt that properly regulated jurisdictions such as Jersey will be the ones that attract family offices as the global landscape continues to shift in favour of transparency. Jersey has always been a leader and early adopter of rules around economic substance and anti-money laundering initiatives with the expertise and professional services to deliver on the subsequent requirements.

Family offices want to be located in a jurisdiction which is properly regulated and with a sound reputation. Jersey is not a light touch regime, it is well-regulated and that is something that wealthy private clients are looking for.

The structure

A family office may take an almost unlimited range of legal forms – from a conventional company limited by shares to a protected cell company to a limited partnership to a limited liability partnership to a unit trust to some other form of trust to a foundation or to some combination of these.

There are multiple factors which might impact upon the choice of legal structure, but some of the principal ones we see include the following:

• The purpose of the family office: If it is directed at only specific purposes, certain structures may not be suitable. For example, where the family want to be able to make investment decisions, a fully discretionary trust may not be the appropriate investment vehicle. But a trust where the investment powers are reserved to a family investment committee might be.

• Simplicity: As a general rule, it is usually best to adopt the simplest possible structure consistent with achieving the desired purpose

• Tax: the onshore tax position of family members may restrict what structures may be available, especially where family governance will involve family members in decision making

• Regulation: The structure and activities of the family office and its key individuals may need to be regulated for financial services business and / or under the anti-money laundering regime, or may benefit from an exemption from regulation

Stability and security

In times of political turbulence, Jersey stands out as a safe harbour, offering stability, strong legal foundations, and close links to the UK and Europe. This stability is a key factor for ultra-high net worth families in choosing Jersey.

Professional services

The availability of high-quality professional services, including investment, accounting, and legal expertise, is essential for the effective operation of a family office. Jersey's professionals are adept at addressing complex family dynamics and governance issues.

The importance of governance

Every family office is different and reflects the needs and interests of the family or families that it serves. Effective family governance and compliance with economic substance rules are crucial.

The expertise in both these areas available in Jersey ensures family offices can meet these requirements efficiently, benefiting from the island's positive reputation and cooperative status.

Setting up in Jersey

Establishing a family office in Jersey involves coordinating various local legal services, including finding premises, employment advice, and regulatory compliance.

In recent times many mandates have been connected to asset management, such that a fund structure might well be incorporated into the family office platform. Inevitably these structures will need funds and regulatory advice. Private wealth advisers may also advise on the holding structure for the family office, the form of which will often be driven by succession planning, control and tax.

Licensing and regulatory considerations

Before establishing a family office in Jersey, it's crucial to determine the need for a business licence.

Where the intention is for a regulated trust company service provider in Jersey to act as host for the family office structure and there is no intention for the family office to employ its own staff or establish a real presence in Jersey, then the structure will generally be exempt from the registration requirements under the Financial Services (Jersey) Law 1998 on the basis that the service provided will be regulated. In most cases, family office structures administered by a regulated trust company service provider will involve the establishment of a private trust company or a foundation where the board or council (as the case may be) is comprised of a combination of family members, regulated professionals and other appropriately qualified advisors.

Where there is intent to be a real presence in Jersey, and the family office is employing staff in the island, then a business licence will be required prior to the set-up of the family office under most circumstances. A business licence may be required even if the office is not going to employ people directly, but also if it is engaging consultants or secondees. Financial services regulatory advice may also be necessary on a case-by-case basis, ensuring compliance with Jersey's well-regulated financial landscape. This depends on the activities of the family office.

Employing staff

Certain applications will need to be considered if the family office is to employ people who have not been continuously resident in Jersey for more than five years.

If the employee is considered to be an "essential" employee (where the requisite skill set cannot be readily found in Jersey) an application for "licensed" status may be made. This permits the family office to recruit the necessary professionals from outside the island. Such employees may also require work permits and visas, and their "licensed" status allows them to buy or rent property in Jersey.

Family offices must comply with local employment and discrimination laws when drafting employment contracts, handbooks, and policies. This may involve adapting existing documents to meet Jersey's standards.

Premises

There are a number of options available for family offices looking to rent or buy commercial premises in the island, with options ranging from serviced offices to high-quality commercial properties, with commercial agents available to assist in this process.

Given the substantial differences in property laws compared to other jurisdictions, obtaining appropriate advice is critical before any commitment.

The family office should not enter into any lease or occupy any property without having a business licence where one is required.

High Value Residency

High-net-worth individuals relocating to Jersey should consider applying for High Value Residency, which is based on the potential contribution to Jersey's tax revenues and the overall benefits to the island. This process requires specialised tax advice and planning.

Conclusion

Jersey's regulatory framework, political stability, professional services, and commitment to governance and economic substance make it an ideal location for establishing a family office. Our aim is to provide clients with a comprehensive and seamless service, ensuring their family office thrives in Jersey's conducive environment.