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Oct 31, 2017

How can I achieve sound multigenerational stewardship of my family’s assets and values?

Losing sight of one’s goals is both a common phrase in our language and a just-as-common mistake people make in their lives overall, and their wealth management in particular. Fortunately, there is a way to prepare the next generation’s members to become sound stewards of your family’s assets and its values.

It’s called “family governance,” and while the concept may sound daunting, it relies on fairly simple yet sound ideas, and processes, that we will explore here.

WHY FAMILY GOVERNANCE?

To put it in plain terms, family governance is about more than just your money. It is organizing your family values, objectives, actions and reactions to promote the long-term well-being of your family and its assets. It is a way of “governing” which, when it’s democratic, with everyone having a vote, sets the stage for cohesiveness in sharing, telling and living the family story.

FIRST STEP: CHOOSE AN APPROACH.

Will your style of family governance be a highly formal, structured approach or a more informal, “as-needed” way of governing?

A formal approach might include a family mission statement, an actual family charter or constitution, a code of ethics, a family assembly/council, family meetings with tightly
structured agendas and a charitable entity in charge of family giving.

Some families choose a formal approach because they believe it encourages rising generations to respect and acknowledge the importance of the family’s governance practices.

If, however, you prefer a less formal approach, consider adopting a short, simple document outlining the values and goals of the family. Also consider scheduling family meetings as needed, with less structured agendas, as well as a “family discussion” format to address family financial issues.

Whatever your approach, keeping your family government “democratic” by agreeing that older generations will not dictate to younger ones is vital to its success.

EMPLOY ITEMS IN THE FAMILY GOVERNANCE “TOOLBOX.”

Family mission statement. This is a clearly articulated collection of everyone’s thoughts, ideals and philosophies that can, among other things, create a foundation for an ongoing dialogue and prepare an agreed-upon road map for rising generations. Here is just one mission statement example:

“We will encourage and assist individual family members in pursuing personal goals, passions and talents through emotional and financial support.”

Family meetings. Whether formally scheduled or held as needed, family meetings can cover a myriad of family-related topics, including family assets, estate plans and philanthropic goals, family history and educational goals for the present and future generations.

Family council. This is a democratically selected committee charged with carrying out certain family-agenda items. The family council may be made up of one member from each generation, and/or one member from each “root” of the family.

We understand that a family’s most difficult struggles often have little to do with money. Employing family governance gives all family members a voice in how both financial and emotional issues receive attention and care. In short, when a family establishes a “government,” it not only benefits the family as a whole, but each of its “citizens” as well.

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