As families and their advisers look beyond traditional wealth centres as a location for the family office, the British Overseas Territories (BOTs) of Bermuda and the Cayman Islands are proving increasingly popular choices.
These jurisdictions offer many advantages. They are both top-tier international financial centres, well-versed in investment matters, wealth management, trust structuring and philanthropy, as well as aircraft and yacht registrations, all key areas of interest to many family offices. Despite their relatively small size, they have an abundance of highly qualified professionals with a breadth of experience in complementary areas suitable for family offices' needs. Indeed this is what sets these BOTs apart from many similar locations, which may be able to offer an island lifestyle, but cannot compare with the professional expertise and modern, sophisticated infrastructure present in Bermuda and the Cayman Islands.
Each jurisdiction has its own strengths. As the world's largest offshore insurance and reinsurance market, Bermuda offers particular expertise in risk management, which is a significant part of the wealth management equation for families with substantial assets. The Cayman Islands is the world's leading offshore hedge fund jurisdiction, so family offices invested in hedge funds would benefit from local expertise.
As British Overseas Territories, the jurisdictions' legal systems are founded on English common law, familiar to wealthy families and their advisors from around the globe. They are particularly well regarded trusts jurisdictions, offering the innovative and bespoke structures that the world's wealthy require in order to hold various assets across multiple jurisdictions.
While family offices have traditionally been operated "onshore", in places like London or New York, recent events may prompt a review of whether this is best-suited to the ongoing needs of some family groups. As well as demonstrating the ease with which many professionals can now work remotely, the pandemic has exacerbated political instability in jurisdictions where the world's wealthy have traditionally been based (for example the USA, UK and Hong Kong). Also, with wealth taxes likely to be at the top of the political agenda for many countries in the foreseeable future, the appeal of a tax-neutral base in a politically stable jurisdiction is only likely to rise.
This article was originally published in Abode2.
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