The topic of the Cayman Islands being a good domicile for family offices was touched on throughout the inaugural STEP Cayman conference, which took place Jan. 29 and 30 at Kimpton Seafire Resort + Spa.
“We are passionate about bringing the presence of family offices here,” said conference chairman Alan Milgate. The two-day conference, which was organised by the Cayman chapter of the Society of Trust and Estate Practitioners, featured an extensive line-up of local and international speakers, including Chief Justice of the Cayman Islands Anthony Smellie, who gave the keynote address. In addition to the speakers, there were panel discussions, breakout sessions and networking hospitality events, including a welcome cocktail reception on the eve of the conference and the farewell beach party.
Family offices were mentioned several times throughout the conference as they related to the various topics discussed. However, on the afternoon of the 29th, one of the panel discussions was dedicated to family offices.
The panellists first discussed what family offices were and whether there were “one-size-fits-all” structures for them. Panellist Jonathan Murphy of GK Management in the Cayman Islands said he didn’t think there was a sensible definition for what a family office is because they are platforms that are customised for the different needs of different families.
“And there’s a wide variety of needs,” he said.
Panellist Amy Szostak of Chicago-based Northern Trust Global Family and Private Investment Offices said that every family office is set up differently and that many people who establish them don’t really know what they want to do with them initially.
“When people come to us and say they want to set up a family office, we say, ‘Great, what do you want to do together?’ That’s what’s important because [family offices are] usually about pooling resources, pooling assets. Certainly investments are a typical leading factor, but if you have a family that’s not interested in working together, they’re not going to want a family office.”
Once the family office advisors learn what families want to accomplish, they can determine what types of resources they can provide, Szostak said.
“Is it going to be investments, is it recording, accounting, tax, legal advice, philanthropy — a lot of families come together around wonderful foundations — and so it’s really not about having a family office, it’s about saying ‘what do we want accomplish together?’ and that’s really where I think families should be starting with this process.”
KEN DART’S DECISION
Also on the panel was Dart Enterprises Vice President Community Development Chris Duggan, who spoke about why Ken Dart chose the Cayman Islands as the place to domicile his family office back in 1993, after first visiting the island in the late 1980s.
“The decision factors that Ken Dart was considering when he set up the family office 25 years ago are still pertinent today because he still considers the Cayman Islands as the best jurisdiction in the world to base his family home and his family office,” Duggan said. “His initial plan wasn’t to have the investments in the real estate that he has in the Cayman Islands today; it was initially just to relocate his family home and set up his family office. Everything that came after that was because of the strength of the jurisdiction.”
Duggan said some of those factors included the safety and security on the islands; a politically stable government in a British Overseas Territory that is governed by English Common Law; solid infrastructure, particularly in relation to communications; proximity to the United States with good airlift to North American cities; a time zone that made it easy to communicate and conduct business with people located everywhere from California to Western Europe; a fixed exchange rate; and best-in-class service providers including accountants, lawyers, trust practitioners and others in the financial services industry.
DOMICILE OF CHOICE
Szostak said she thought Ken Dart chose well to establish his family office here and added another factor which she feels makes the Cayman Islands an ideal jurisdiction for family offices.
“The judiciary here has done an amazing job,” she said. “It’s very confident, very thoughtful, very reliable and when we’re thinking particularly about a trust jurisdiction, that’s exactly what we’re looking for. We’re looking for a place that not only has all those factors [Duggan] just named, but we’re also looking at what decisions are coming out of the judiciary.”
Although family office platforms can be large, complex and almost like a corporation, Szostak said they are really about people and families and family dynamics.
“So hearing Ken Dart’s story is really about that,” she said. “He made a personal choice to come here a long time ago based on factors that are still incredibly important today and that not only impact his company, they affect his family.”