Private Wealth & Family Office

Q: Why are foundations commonly used to hold family businesses?

They prevent fragmentation of ownership, preserve strategic control and reduce family conflict by separating ownership from benefit.

Q: Do beneficiaries own foundation assets?

No. Beneficiaries have privileges under the charter but no legal ownership rights over the assets.

Q: Can Muslim families choose conventional Labuan foundations?

Yes. Muslim clients may opt for Islamic or conventional foundations depending on their objectives.

Q: Can Labuan foundations avoid CRS reporting?

Private family foundations not structured as financial institutions are typically not subject to CRS reporting, subject to correct classification.

Q: Can I establish a private family office without using Malaysia’s incentive scheme?

Yes. Many families build private family offices using trusts and foundations as the legal structure, regardless of incentive schemes. Private wealth structuring today is not about complexity. It is about: Legal protection Governance discipline Family harmony Intergenerational continuity Cross-border sustainability Labuan provides the legal architecture. Malaysia provides the operating ecosystem. Confiance designs, implements and stewards the entire private wealth journey.

Labuan: A Strategic Jurisdiction for Private Wealth Preservation

Confiance Labuan supports private clients across the full lifecycle of private wealth planning, from structuring and advisory to administration, governance and long-term stewardship.

Labuan International Business and Financial Centre (IBFC) is recognised as a sophisticated jurisdiction for private wealth structuring, succession planning and family governance. Its framework is supported by:

Families and founders use Labuan structures to achieve:

Long-term wealth preservation

Orderly ownership of operating companies and investment portfolios

Protection against personal, commercial and political risk

Clear succession planning across generations

Governance discipline to preserve family harmony

Tax Treatment

Tax outcomes for Labuan private wealth structures are governed by:

The effective tax position depends on:

In practice, outcomes generally fall within:

Distributions from Labuan trusts and foundations to beneficiaries are generally treated as tax exempt in Malaysia under prevailing exemption orders, which supports efficient intergenerational wealth transfer when structures are properly designed and compliant.

However, failure of substance compliance will subject to 24% tax on audited net profits treatment.

Trust Structures in Labuan

A Labuan trust, governed by the Labuan Trusts Act 1996, is a legal relationship where a settlor transfers assets to a trustee (a licensed Labuan trust company) to hold and administer for beneficiaries or stated purposes.

Trusts are commonly used for:

Typical trust types include:

All Labuan trusts must appoint a licensed Labuan trust company as trustee.

Private Trust Company (PTC) – Enhanced Governance & Family Control

A Private Trust Company (PTC) is a structure where the trustee itself is a company established to act only for one family (or connected families), rather than a third-party institutional trustee.

This allows the family to:

Appoint family members or trusted advisers to the board

Retain strategic control over trustee decisions

Embed family governance philosophy

Maintain continuity across generations

Reduce reliance on external trustee discretion

Provide long-term succession stability with strong governance and regulatory alignment

Trust vs Private Trust Company (PTC)

Aspect	Traditional Trust	Private Trust Company
Trustee	Professional trust company	Trustee company controlled by the family
Family involvement	Limited influence	High degree of involvement and control
Governance flexibility	Standard trustee framework	Fully customisable governance
Complexity	Simpler	More sophisticated
Best suited for	Most families	UHNW families, founders, complex structures
Longevity	Depends on trustee continuity	Designed for multi-generation continuity

PTCs are commonly adopted by entrepreneurial families, founders and families with multi-jurisdictional assets who wish to institutionalise governance within their private wealth structures.

For more information, refer to Offshore Entity & Redomiciliation

Labuan Foundations – A Powerful Wealth Holding Vehicle

A Labuan foundation, governed by the Labuan Foundations Act 2010, is a separate legal entity that owns assets in its own name and operates according to a charter.

It is increasingly used as the ultimate investment holding structure for families.

Key parties and roles within a Labuan foundation:

Founder
Establishes the foundation and contributes assets
Council Members
Responsible for governance and decision-making
Officer
Oversees administration and regulatory compliance
Secretary
Maintains statutory records and filings
Supervisor
Mandatory for charitable foundations; optional for private foundations as an added governance safeguard

Why Families Prefer Foundations for Long-Term Wealth Planning

Preserving ownership of family businesses

Foundations can hold shares in operating companies as a single long-term owner, avoiding fragmentation of ownership across heirs and preserving:

Strategic control
Voting coherence
Business continuity

Preserving family harmony

Beneficiaries of a foundation have no legal ownership rights, only benefits granted under the charter. This helps reduce:

Entitlement disputes
Family conflicts
Succession uncertainty

Strong ring-fencing against foreign claims

The Labuan Foundations Act includes statutory protection limiting the enforceability of foreign judgments (including inheritance, marital or creditor claims) after a prescribed period unless fraud is proven to a high threshold. This provides meaningful protection for cross-border families.

High confidentiality

Properly structured foundations are regarded as private and discreet vehicles suitable for sensitive family wealth arrangements.

CRS positioning (structure-dependent)

A private family foundation that does not carry on financial intermediation and is structured purely for holding family assets is generally not classified as a financial institution, and therefore typically falls outside CRS reporting obligations, subject to proper classification and professional assessment.

Islamic (Waqf) and Conventional Foundations

Labuan supports both

Islamic foundations, including waqf-style perpetual endowment structures

Conventional foundations

Waqf-style foundations are often used for

Religious endowments

Education legacies

Long-term philanthropy

Social impact objectives

Family Office Architecture & Malaysia Family Office Incentive

A family office is not a licensed activity under Labuan law. Instead, it is an operating model built around legal vehicles such as trusts and foundations.

Malaysia has introduced a national Family Office incentive framework through the Forest City Special Financial Zone, supported by policy announcements from the Securities Commission Malaysia and the Ministry of Finance, to attract ultra-high-net-worth families.

Commonly referenced features include:

Tax incentive of up to 10 + 10 years on qualifying income (subject to approval)
Minimum Assets Under Management (AUM): typically RM30 million and above
Requirement for local substance, including staff, operations and governance in Malaysia
Focus on genuine wealth management activities

In practice, families adopting this framework commonly structure their ecosystem as:

Top layer: Labuan trust or foundation (ultimate asset holding and succession vehicle)
Middle layer: Malaysia family office Holding companies (SFO and SFOV)
Operational layer: Subsidiaries managing investments, governance and reporting

Families who do not apply for the incentive may still establish a fully functional private family office using Labuan trusts or foundations as the legal backbone.

For more information, refer to Business Support (Family Office Ops)

Regional comparison

Jurisdiction	Malaysia (Forest City FO)	Singapore (13O / 13U)	Hong Kong (Single FO Regime)
Regulator	Securities Commission Malaysia	MAS	IRD / SFC
Indicative AUM	From ~RM30m	SGD 10–20m+	HKD 30m+
Tax incentive	Up to 10 + 10 years	Tax exemption on qualifying income	Profits tax concession
Substance required	Yes	Yes	Yes
Operating cost	Low–moderate	High	High

Many families therefore adopt a hybrid model:

Labuan for legal wealth preservation + Malaysia for family office operations.

Confiance Private Wealth & Family Office Services

Confiance Labuan works closely with its sister company, Confiance Family Office, to deliver an integrated private wealth platform.

Structuring & Advisory

Administration Services

Family Office Support

Family Governance Advisory

Compliance, KYC & Policy Frameworks

Frequently Asked Questions

What is the difference between a trust and a Private Trust Company (PTC)?

A trust uses a professional trustee. A PTC allows the family to control the trustee company, offering greater governance and long-term control.

Why are foundations commonly used to hold family businesses?

Do beneficiaries own foundation assets?

Can Muslim families choose conventional Labuan foundations?

Can Labuan foundations avoid CRS reporting?

Can I establish a private family office without using Malaysia’s incentive scheme?

Get Started with Your
Labuan Private Wealth & Family Office Journey

With our presence across Malaysia, Labuan, Singapore, Thailand, Indonesia and Bhutan, and deep expertise in cross-border structuring, we help families navigate complex regional dynamics while preserving legacy with clarity and confidence.

Contact sales@myconfiancegroup.com to set an appointment for a confidential discussion.