Why Guernsey for Private Wealth?
Why Guernsey for Private Wealth?
“Guernsey was our jurisdiction of choice due to the high level of regulation and standards that the corporate service providers are subject to in the island, this leaves the island with an excellent reputation of professional standards and ease of doing business. This gave us comfort that our intergenerational planning and trust structuring decision to be in Guernsey was the right choice for us.”
Euan Melrose Director, Business Development, Imperium
Political and economic stability - as a British Crown Dependency, Guernsey has constitutional autonomy with access to global markets
Robust regulatory environment - with an independent legal system and a breadth and depth of service providers
Committed to international standards - respecting clients’ right to privacy
More than five decades of expertise in private wealth - embracing the next generation of wealth owners
For more than 50 years, Guernsey has been globally recognised as a leader in private wealth, family office management and structuring.
Guernsey’s strengths and excellent reputation come from our expert professional service providers, offering a range of flexible structures. Individuals and families can easily manage their wealth, investments and philanthropic endeavours in a safe, secure and stable environment with close proximity to London and access to global markets.
Why Guernsey for Private Wealth?
More about Guernsey
Guernsey is committed to substance, and was whitelisted by the EU and OECD in 2019. Guernsey has a mature legal and regulatory system. Guernsey is tax neutral and takes a robust stance against tax evasion and is committed to EU principles of fair taxation. The island is compliant with MONEYVAL and committed to AML/CFT.
Guernsey is a British Crown Dependency with 800 years’ history of constitutional independence and is recognised for its political and economic stability. Guernsey is self-governing with close links to the UK and Europe, with access to global markets.
Guernsey
Guernsey Financial Services Commission (GFSC)
The Guernsey Financial Services Commission is the regulatory body for the finance industry in the Bailiwick of Guernsey.
The GFSC oversees more than 2,000 licensees across the financial services sector. The Commission adheres to standards established by international bodies, including the Basel Committee for Banking Supervision, the International Association of Insurance Supervisors, the International Organization of Securities Commissions, and the Financial Action Task Force on Money Laundering.
The GFSC has a trusted reputation as an approachable, proportionate, and pragmatic regulator. The speed to market for private wealth structures, complemented by the stability of Guernsey’s political and regulatory environment, offers a unique domicile.
Innovations such as the Electronic Agents Ordinance (2019), and Natural Capital Fund regime (2022), prove Guernsey’s commitment to developing the island’s legal and regulatory landscape.
Why Guernsey for Private Wealth?
Case study
“A high net worth family office with a diversified investment portfolio and business interests in Europe were seeking a strategic location that would allow for the efficient management of their assets across various jurisdictions.
The family chose Guernsey predominantly due to the island’s long history of political neutrality and independence , ensuring a secure environment for long-term asset management. The legal framework in Guernsey also allows for a high level of legitimate confidentiality and privacy for family offices, which was crucial for the family in keeping their affairs discreet, particularly for personal safety reasons.
The family also found that Guernsey boasts a wealth of experienced professionals in law, accounting and wealth management. The availability of high-quality service providers ensures that the family office can access expert advice and support for complex financial planning and investment strategies.
Separately, the family noted that Guernsey has a knowledgeable regulator, experienced in dealing with family offices.”
The Guernsey Trust
Benefits
Guernsey offers a flexible trust regime, allowing wealth holders to ensure protection of assets and appropriate succession planning is in place for families.
The Guernsey Trust Law also allows for trusts to be established for a variety of purposes, including charitable purposes.
Guernsey offers extensive case law and legal precedents, enabling clients to act with the upmost confidence in the legal foundations of the jurisdiction.
Guernsey’s supporting industries host more than 800 STEP members, with professional development at the core of many firms across the finance industry. Guernsey offers expert service in all aspects of wealth management.
Uses of a Guernsey trust structure include:
Preservation of wealth assets
Preserve ownership of assets such as a business or property within a family
Protect assets in a stable and secure environment, minimising risk from political uncertainty
Effectively structured trusts can ensure protection of family assets from proceedings in the event of divorce
Succession planning
In a world of changing cultural values, norms and traditions, Guernsey trust structures can be utilised to ensure assets are passed to the next generation in the manner intended by the family
A trust offers an efficient vehicle for the handover of assets to the next generation, not requiring a grant of probate or similar formalities
Why Guernsey for Private Wealth?
Case study
“An entrepreneurial patriarch was concerned with succession and estate planning, particularly with regard to the wealth he had generated through his own business interests – he had a broad family with various factions, and anticipated there could be family disputes arising after his demise.
After considering legal and tax advice, it was agreed that using a structure based on a Guernsey law discretionary trust was the most effective way to move forward.
However, during his lifetime, the settlor has expressed a desire to retain some involvement and control; the options around this have been discussed, such as the settlor reserving certain powers to himself or acting as protector. However it was determined that using a Private Trust Company (instead of a discretionary trust, “PTC”) was the ‘best fit’ for the settlor’s requirements.
When setting up the PTC, it was felt that having both the settlor and the Guernsey fiduciary sitting on the board of the PTC would best enable the transfer of knowledge and experience in regard to the assets being settled into the trust and would allow the Guernsey fiduciary to grow their knowledge of the settlor’s ongoing business philosophies and family considerations.
Alongside the PTC structure itself, a Family Constitution was put in place, particularly with a view to how the PTC would be managed after the settlor’s demise and how the family could benefit from the structure in the future.
As part of the practicalities of implementing the PTC, it was noted that the Guernsey regulatory environment was well versed in the use of such vehicles and that local Guernsey lawyers were experienced in navigating the regulatory process.”
Director, Trust Services Provider, Guernsey
The Guernsey Foundation
Flexibility
The Foundations (Guernsey) Law, 2012, is highly flexible and allows for a variety of purposes, both charitable and for profit, enabling clients who are less familiar with the concept of a trust to secure and control their wealth.
Guiding wealth for the future
The flexibility of a foundation to operate with or without beneficiaries allows those who may not have a firm succession plan in place to begin the process of structing wealth for the next generation, or as a charitable foundation, should the client’s personal circumstances not require succession planning. Administered by a council who only serve the foundation, the foundation is the ideal structure for philanthropic endeavours, or for succession planning for less financially knowledgeable benefactors.
Wealth protection
The foundation’s ability to hold assets and to allow for assets to be passed directly to the intended recipient – without the interruption of forced heirship rules – makes the foundation an ideal vehicle to protect assets for future generations. The ability to transfer a foundation from other jurisdictions to Guernsey offers the client the continuity of their existing structure, while benefitting from Guernsey’s security and autonomy.
Cobo Bay, Guernsey
Case study
“A Middle East high net worth individual holds substantial business assets which he wishes to protect. The current proposal is to use a dual structure consisting of:
1. A Guernsey Foundation for asset protection and inheritance planning for assets outside the GCC (Gulf Cooperation Council).
2. A DIFC Foundation which would own local assets. These two foundations would run in parallel.
It was noted that a foundation-based structure was being proposed, as a foundation is more familiar to those living in civil law jurisdictions. A Guernsey Foundation can also be used to mirror the local GCC Foundation; and a Guernsey Foundation could be structured to allow for a mixed council of service providers and family members.
The foundation structure can hold complex underlying assets in a substantial combination of jurisdictions together with the hundreds of companies which comprise the HNW entrepreneur’s business empire. Guernsey, as a robust and stable jurisdiction with a practical legal framework and local, technical expertise to handle this level of complexity, is well-placed to provide the relevant services to keep the foundation in good standing and to administer the wider structure.”
Private Investment Fund (PIF)
The PIF is a cost-effective, fast to launch and flexible structure used by asset managers and family offices with a professional, sophisticated or family investor base.
The PIF has three different routes to market:
Route 1 Using a POI Licensed Manager
Route 2 For a Qualifying Private Investor
Route 3 For investors with a family relationship
Benefits
If an application meets the required criteria, a PIF can be established in one business day, with the option of both closed and open-ended funds to choose from.
The PIF can take several forms to suit the requirements of the client as a company, unit trust, limited partnership, or as any vehicle or entity approved by the GFSC.
A straightforward application process, which is cost effective to both set up and manage.
Uses
Tailored family investment
Operating in a specific family circle, the PIF can invest directly to meet the needs of the family, incorporating risk appetite, specific goals, and long-term strategies. This includes the opportunity to invest collectively into more exclusive offerings such as VC and property through the diverse range of structures available.
Controlled and flexible
Investing as a family collective to a PIF allows investors to play a more active role in the management of their investments, compared with other wealth management solutions where decisions can be made at a distance to the beneficiaries. The speed of establishment of a PIF, and the direct control of investments gives the family flexibility and the ability to mitigate market risks.
Case study
“A family of sophisticated investors wish to establish their own inhouse investment function - they have the private equity expertise but wanted to outsource the administration and accounting for the fund structure.
Initially, they wanted to use a limited partnership fund-type format, however the family ultimately chose Guernsey as they wished to take advantage of a PIF structure as it is easy to understand, is flexible and cost-effective and is quicker than a ‘classic’ fund structure to set up.
The family also noted that, although a PIF benefits from lighter regulatory requirements than funds, the PIF’s investors can be reassured that a PIF is still required to be audited by a third party and further, is administered by a regulated entity. Therefore, there remain substantial protections in the event that there is disagreement or fall out within the family.
The PIF regime allows for the establishment of three different types of PIF. The family originally considered setting up via Route 3 (family relationship) on the basis that they are all related and this route allows for the most convenient method of implementation. However, on reflection, they decided that there may be a desire to market the PIF outside of the family group and therefore opted for Route 2 (Qualifying Private Investor) when establishing – this would also allow for co-investment opportunities with like-minded families.”
Philanthropy and Family Office
Family Office
Guernsey’s history of servicing clients and their families in all aspects of wealth management has established the jurisdiction as a safe, secure, and expert service provider of choice to families across the globe.
Committed to upholding international reporting standards, while maintaining client privacy, Guernsey gives clients the confidence their wealth is domiciled in a jurisdiction of upmost substance and security. The ecosystem of providers that Guernsey has allows families to manage all aspects of their office in one location, with industry leading experts available in every area.
The close proximity to London enables clients from across the globe to utilise Guernsey as their domicile of choice for Family Offices, thanks to established transport links and business relations between London-based practitioners and Guernsey firms.
Philanthropy
The agility of Guernsey structures enables philanthropy to be at the forefront of any investment strategy; Trusts (Guernsey) Law, 2007, allows for charitable purpose trusts
Foundations (Guernsey) Law, 2012, allows for foundations to be established for a purely charitable aim
Limited by Guarantee Companies (LBG), are often used for philanthropic purposes, members generally do not receive profits, which are instead re-invested into the aim of the business
Case study
Sustainable Finance
Guernsey is an established centre for sustainable finance, launching world-first finance ESG frameworks for insurers and pension providers. In 2021 the Finance Sector Code of Corporate Governance was updated to ask boards to consider the impact of climate change on their strategy and risk profile and, where appropriate, make climate change-related disclosure.
Clients can utilise the expertise of Guernsey providers, who not only recognise the importance of engaging in conversations of sustainability and philanthropy, but also have the products and providers available to them within the ecosystem of Guernsey to effectively deliver on client ambitions.
“A Guernsey Foundation was set up to mirror a foundation already in existence in another jurisdiction, in light of the founder’s desire to have a foundation in a reputable jurisdiction with professional service providers and in the same time zone as the UK. Going forward, philanthropic endeavours would be undertaken by the Guernsey Foundation with purposes focused on funding medical research and treatment studies. A modern constitution designed for long-term management of philanthropic donations was designed with input from the founder, who was specific on the area of philanthropic donating he wanted the foundation to focus on, but without overly prescribing what charities and organisations could benefit.”
Ogier - using a foundation for philanthropy and funding medical research
Working with South Africa
“My SA client set up a Guernsey trust. The trusted advisor network and cross border expertise and depth of experience on the island made this an easy decision.” Anonymous
“Our ability to navigate the European and UK Investor market enables us to invest into Africa using Guernsey funds structures, particularly with our ESG credentials as a jurisdiction and our green funds regime.”
Grant McLeod, South Africa Representative, Guernsey Finance
Working with the United Kingdom
“Guernsey is interpersonal, they work for not who they are, but who the client is and exceed expectations” Tax Adviser
“Guernsey is about quality. We direct our clients there for trustee services because it’s not flash - it’s filled with intelligent, measured and professional individuals who are not cavalier with regulations, tax responsibilities and the client’s money. For families wanting support in the sensible and responsible stewardship of private capital, this is ideal.” Lawyer
Working with the Middle East
“Guernsey foundations offer an innovative alternative to trusts … in-depth knowledge and experience of the drivers and needs of clients from this region.” Anonymous
“Guernsey has been very helpful in both finance and legal assistance. I would highly recommend it if you delight in dealing with serious professionals.”
HNW Investor
“The Guernsey offering has enabled us to diversify our booking centres without compromising quality of the service and regulation for our clients. In fact, we have found the quality to be superior to some of the sister Channel Islands simply because the smaller scale provides a more dedicated and hence higher level of customer service. There is nothing we can achieve in any of our other booking centres that we cannot in Guernsey.”
Family Office Chief Investment Officer
Working with the Americas
“Increasingly clients, particularly from the Americas, are using Guernsey vehicles to hold their assets. They view Guernsey as a well-regulated and stable jurisdiction with longstanding yet flexible structuring options which include companies (PCCs and FICs), GP/LP structures as well as foundations and trusts. These structures can be tailored to their specific needs with assets held in perpetuity, meaning they can preserve private family wealth for generations to come.”
Gilly Kennedy-Smith, Partner - Mourant
Working with East Asia
“Guernsey has deep experience in the stewardship and intergenerational transfer of private wealth. As a politically stable, self-governing island, Guernsey is a trusted jurisdiction in an increasingly complex geopolitical environment. It is also a founding member of the United Nations Financial Centres for Sustainability and hosts the world’s first regulated sustainable fund regimes.”
Jacob Cockcroft, Chief Commercial Officer, Butterfield Guernsey
Why Guernsey?
“Many of my clients pick Guernsey as a jurisdiction of choice for their private wealth structures as the island is seen as a safe and stable jurisdiction with a world leading regulator. Making it an ideal location to hold their wealth knowing that is safe for future generations. In addition, the whole ecosystem on the island that has been built around the finance industry makes it an ideal choice with many leading and internationally recognised lawyers, banks, investment houses and advisors all situated on the island.” Neil Hoolahan, Director – Grant Thornton Guernsey
Guernsey
