The Growing Concept of Family Offices in India There has been a significant growth of private wealth in India in the recent years. In fact, India is the only economy out of all the BRIC countries, which has witnessed the emergence of family offices. According to a study conducted by Association of International Wealth Management of India, it has been estimated that there are approximately 90 single family offices in India managing around $100 billion family wealth. The family offices in India are situated in plush
commercial buildings across the metropolitan cities and provide their services to the growing number of wealthy families in India. The offices primarily manage the family wealth of the top notch companies such as TATA, Bajaj Auto, Cipla, and Godrej Industries. If you are not very aware of the concept, read the blog to get an overview of the emerging concept of family offices. Functions The primary function of a family office is to aggregate the cash flows generated by the family business and utilize the funds in various investment opportunities. The family office also helps in managing the administrative services such as obtaining legal advice and clearing all the bills. In addition, they also play an important role in establishing the roles of succession of the management roles to sustain and accelerate the business growth. Setting up a family office also helpful for businesses that have multiple decision makers placed in various jurisdictions in different countries. In short, family offices help in synchronizing the business considerations and develop various mechanisms with time as the plans of managing the business by the younger generation may not match with their previous generations. Setting up a Family Office Businesses have the discretion to setup an SFO or MFO depending on their needs. A family may set up an SFO if they plan to generate more business or assets. Alternatively, they can set up an MFO if they need advice to achieve their future goals. MFOs pool money from multiple families in order to achieve economies of scale because the expenses are shared and have large pool of capital to make more investments. There are numerous options of setting up family offices in India. They can opt for private company, limited liability partnership and trust. A trust structure is generally preferred due to its flexibility. Another slightly expensive but popular option is to set up a Private Trust Company. Obligations of Disclosure Resident of India are required to disclose all assets and any financial interest held by them outside India. They also need provide details of the signing authority for accounts held by them located outside India. The disclosures need to be made for tax returns filed every year. If the trusts are set up outside India, disclosure is required in the following circumstances: ●If the resident is a settlor of the trust ●If the resident is a trustees of a trust ●If the resident is a beneficiary of trust and it is a determinate trust or if it makes distribution during the relevant year for tax returns.
Last Few Words People with reasonable assets set up family offices and take the help of professionals to manage their assets. While SFOs are preferred by the rich, the not-so-rich avail the services of multifamily offices. Family offices take care of almost everything starting from investments in tax and succession planning.