Family Investment Companies: A Modern Approach to Wealth Preservation

What is a Family Investment Company?

A Family Investment Company (FIC) is a private limited company established specifically to manage and protect family wealth. Unlike traditional trading companies, FICs serve as strategic vehicles for intergenerational wealth transfer, offering families a modern alternative to traditional trust structures.

FICs operate under UK company law, with family members holding shares that can be structured into different classes, typically with older generations retaining voting control through voting shares, while younger family members receive non-voting shares with economic rights. This allows founders to maintain decision-making authority while transferring wealth to future generations.

Key Advantages

Control and Flexibility

Founders maintain significant control over company assets and investment strategy through carefully structured share classes and directorships. Sumer Law can assist you by incorporating a company fit for this purpose, with bespoke articles and a shareholders’ agreement catering to your FIC’s needs. This allows for strategic decision-making while gradually transferring economic benefits to younger generations. The corporate structure also enables flexible distribution strategies tailored to individual family members’ tax positions.

Tax Considerations

FICs can be an appropriate mechanism to manage tax and be of use when considering IHT planning.

A FIC is an alternative structure to a Trust and has an added advantage of avoiding an immediate Inheritance Tax charge on creation and so, in recent years, has increasingly been seen as a popular alternative, or to sit alongside, Family Trusts.

Retaining assets within a corporate structure can also create tax efficiencies where investment returns are reinvested, as income extraction can be carefully managed. That said, creating a FIC may have tax consequences. Simmons Gainsford can support and advise you on the best approach and structure and whether a FIC is appropriate for you.

Planning for the Future

For families looking to take a proactive approach to wealth preservation and succession planning, a Family Investment Company can offer a compelling combination of control, flexibility, and long-term strategic benefit. The right structure will depend on each family’s unique circumstances, objectives, and future aspirations, making professional advice an important part of the process.

What Can We Do For You?

Whether you’re considering establishing a Family Investment Company or would like advice on succession planning, tax considerations, and ongoing wealth management, our legal and accounting specialists can help.

Sumer Law and Simmons Gainsford, part of the Sumer Group, provide a joined-up approach, offering legal and accounting expertise under one roof.