Protecting Your Family’s Wealth - Could a Family Investment Company be the right solution for you?
Managing significant family wealth requires long term planning to optimise tax efficiency and control. A Family Investment Company (FIC) can be an effective tool for achieving these goals, offering a structured approach to preserving and growing assets. But how do you know if an FIC is the right fit for your family’s financial strategy?
At Forth Capital, our award-winning international wealth management and financial planning advisors provide tailored solutions to help clients worldwide grow and protect their assets. This article explores the benefits of setting up a Family Investment Company (FIC), and whether an FIC could be the right solution for you and your family
What is a Family Investment Company?
A Family Investment Company is a limited company created for the purpose of managing family wealth. It allows family members to invest in assets—such as property, stocks, or other investments—within a corporate structure, enabling greater control over inheritance planning and tax efficiency.
FICs are often seen as a modern alternative to traditional family trusts. While trusts can still play an important role in estate planning, the rise of FICs has offered more flexibility and potential tax benefits, especially for high-net-worth families with substantial assets.
5 Reasons to Consider a Family Investment Company
1. Tax Efficiency
One of the key advantages of an FIC is the potential for tax efficiency. UK corporate tax rates are lower than personal income tax or capital gains tax (CGT). By investing through an FIC, families can benefit from reduced tax liabilities on profits, dividends, and capital gains. Additionally, there are currently no inheritance tax (IHT) implications when shares in the FIC are transferred between family members during their lifetime.
2. Control and Flexibility
FICs provide a high level of control over how wealth is managed and distributed. The founder can decide who receives dividends and when, while retaining control over the company's investment strategy. This makes FICs a more flexible vehicle for wealth transfer compared to trusts, which are bound by specific rules on how assets can be distributed.
3. Intergenerational Wealth Transfer
FICs allow wealth to be passed down to future generations while mitigating inheritance tax. By transferring shares in the FIC to younger family members, the overall estate value for inheritance tax purposes is reduced, without losing control over the assets. This provides a tax-efficient way to manage wealth succession.
4. Asset Protection
FICs offer a degree of asset protection, as assets are owned by the company rather than individuals. This means that family assets are safeguarded from personal claims, such as divorce or bankruptcy, providing greater security for long-term wealth preservation.
5. Privacy
Unlike trusts, which can require public disclosure, FICs offer more privacy. As a privately held company, an FIC's internal structure and financial affairs remain confidential, which can be important for families seeking discretion in their wealth management.
Is a Family Investment Company the Right Solution for You?
While FICs offer significant benefits, they are not suitable for every family. Establishing and managing an FIC can be complex, requiring careful consideration of legal, tax, and governance issues. It is essential to seek professional advice to ensure the FIC is structured correctly and aligned with your family’s long-term objectives.
For instance, FICs may not be the best choice for families with relatively modest assets, as the cost and administrative burden may outweigh the benefits. Additionally, FICs are not typically used for income-generating assets, such as rental property, as the tax benefits may be limited.
Forth Capital - Making the complex simple for high net worth clients since 2004
At Forth Capital, we have a team of dual-qualified advisors who are authorised and regulated across multiple jurisdictions, including the UK, Switzerland, the EU, Australia, the US, and Hong Kong. Our expertise in cross-border financial planning allows us to provide bespoke solutions tailored to your unique circumstances.
If you’re considering setting up a Family Investment Company and would like to discuss your long- term financial planning, investment management and inheritance tax strategies, we’ll work closely with you to ensure your wealth is protected, optimised, and structured in a way that aligns with your long-term financial goals.
Speak to our expert team today
A Family Investment Company can be an excellent vehicle for managing and protecting family wealth, offering control, tax efficiency, and long-term asset protection. However, it’s essential to assess whether this structure is appropriate for your unique circumstances. At Forth Capital, we can guide you through this decision-making process with expert advice tailored to your unique situation.
With our global expertise and tailored advice, we can help you find the best solution to secure your family's financial future, so contact us today to schedule an initial consultation, or email us at [email protected].
This communication is for information purposes only and does not constitute financial, legal, or tax advice. Please schedule a meeting to receive advice on international financial planning and wealth management.