The Bahamas for Family Offices: A Practitioner’s Overview

Family offices are becoming integral to a cohesive and coherent management of far-flung business interests in tandem with domestic and personal affairs.

A family office is a vehicle that can provide a broad range of services to the family or families it represents, from domestic administrative matters (eg, travel arrangements, staffing and household upkeep) to sophisticated support of long-range business, tax and estate planning including the supervision of trusts and oversight of investments that may be outside the family’s core operating businesses.

Reasons to establish a Family Office

The formation of a single, comprehensive structure allows sophisticated and structured oversight of a family’s overarching objectives and opportunities.

Creation of centralized control and responsibility for integral functions around the family’s various interests and obligations provides long term stability; equally, it affords the opportunity to undertake comprehensive succession and generational planning in a single environment.

Consolidation of oversight enhances the ability to provide specific direction as to services sought from external providers and to monitor the services received. Substantive efficiencies can be gained through strategic deployment of assets and advisors, leading to more efficient and cost-effective management.

Immediate access to information from both systems and persons using consistent standards within an integrated setting facilitates the compilation of information required for internal evaluation and external reporting requirements.

In sum, a family office permits the holistic overview and oversight of a family’s wealth, rather viewing disparate elements in isolation from one another.

Building Blocks of a Family Office or One Size Doesn’t Fit All

One of the most intriguing prospects around the establishment of a family office is the freedom to utilize the structural components best suited to achieve immediate and long term goals, because there aren’t prescriptive requirements regarding the elements of which a family office is comprised. From a simple company to a sophisticated private trust company, the planning opportunities are vast, allowing for entities which have active and passive holdings, with wide-ranging roles encompassing administrative, advisory, supervisory, fiduciary and office-holding obligations.

Increasingly, families find it attractive to elect regulatory oversight to enhance transparency, to the degree and at a level they are comfortable with. A Bahamian investment fund is a fully licensed vehicle which may start out with in-house administration or with an independent third party administrator, depending on the internal availability of the requisite skills and knowledge.

Similarly, advisory roles – for the office itself or for a fund - may be fulfilled internally, but it is equally possible for consideration to be given to the establishment and licensing of an independent asset management entity in The Bahamas. Parameters for capitalization and professional indemnification are set by law; physical facilities within the jurisdiction are required and, where necessary, can be satisfied through appointment of an approved representative. Reporting requirements (financial and otherwise) are also designated along with on- and off-site supervisory requirements.

Private trust companies are regulated and overseen by the Central Bank of The Bahamas. While there are no pre-approval or licensing restrictions applicable to private trust companies prior to incorporation, once incorporated a private trust company must ensure it is compliant with all applicable industry regulation including anti-money laundering legislation.

Single versus Multi Family Offices

While the term ‘family office’ may commonly bring to mind a structure created to assist a single family, it is becoming increasing common to create multi-family offices which manage the business and affairs of family groups (for example, those of several siblings) or closely knit friends, business partners and colleagues. Economies of scale have made it more attractive to consider an office which handles several families’ affairs, allowing them to leverage their aggregate interests in a manner which affords access to sophisticated and professional planning on a level which mightn’t have been achieved individually.

Governance Concerns for Family Offices and Associated Structures

While there is considerable debate and discussion around optimal forms of governance for family offices and their associated structures, it must be acknowledged that the current atmosphere strongly favors substance over form. The statutory and regulatory regime in The Bahamas – as well as its case law and common law antecedents - encourages the establishment and maintenance of effective governance systems within and around PTCs, foundations, funds, investment condominiums, executive entities, companies and partnerships.

More broadly, the governance of an off-shore family offices must also take into account permanent establishment and CFC rules necessitating that physical presence and transparency requirements be respected; active oversight and management of fiscal, residency and immigration requirements is essential. The ready availability of financial institutions, qualified professionals and skilled staff on the ground, as well as the opportunity for family members and their trusted advisors to establish residence within The Bahamas, all provide a framework around which compliant, practical and effective management systems may be erected.

Linda Beidler-D'Aguilar
Partner