The Advantages of a Family Investment Company and Asset Protection

Discover what a Family Investment Company is and how this may be beneficial to you and your family.

What is a Family Investment Company (FIC)?

A Family Investment Company is a private limited company whose shareholders are typically family members. The main purpose is to hold and manage family wealth in a tax-efficient manner, providing a flexible vehicle for long-term succession planning and wealth preservation.

Key Advantages of a FIC

Asset Protection:

• By converting your business and company into a FIC, the assets are legally owned by the company rather than individuals. This distinction can help protect family wealth from external threats, such as divorce or creditor claims, as shares in the company (rather than the underlying assets) are held by family members.

Control and Flexibility:

• You can maintain operational control of the company through voting shares or director appointments. This means you can oversee major business decisions until you are ready to step back.

Succession Planning:

• The FIC structure allows for a gradual and controlled transfer of wealth and management responsibilities. 

Tax Efficiency:

• FICs can be used to facilitate tax-efficient generational transfers of wealth, especially in light of recent changes to Inheritance Tax (IHT) and the use of business asset holdover relief. 

Summary

A Family Investment Company can provide substantial benefits, allowing you to:

• Protect the family’s assets from external risk.
• Maintain effective control for as long as you wish.
• Restrict ownership to direct descendants.
• Facilitate a smooth and tax-efficient succession.

 

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