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Financial Planning > UHNW Client Services > Family Office News

Heritage Planning Pt. 7: Fostering Healthy Family Dynamics

By Cameron Thornton

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In previous columns I introduced a number of topics related to the concepts of heritage planning, and in my last posting dated Feb. 29, I discussed how we set up governance structures such as a Family Council during a family’s initial Heritage Day. In this posting I will focus on the family dynamics revolving around a Family Council (view all seven postings to date on the concept of Heritage Planning on this AdvisorOne home page).

Forming a Family Council can raise delicate issues.  For example, do in-laws vote?  Will votes on key decisions be made by a count of total family members, or will each family unit within the whole share a single vote?  How long will officers serve in their positions?  How will change and growth be accommodated as the family council moves ahead and learns what works and does not work?

We have learned time and again the reality that spouses are going to be involved even if they are not voting or participating members of committees—everyone knows what is going on—and if and when children, ex-spouses, and step-kids are added to the mix, mechanisms need to be put in place to ensure that each and every one of them has true permission, protection and potency so that they will participate as equals.

We typically stress the importance of getting as many people from as many generations to participate as possible.  Engagement on the group level across generations is a good thing.  The idea is most often that those who are ages 12-15 are beginning to learn, by observing and participating in discussion.  By the time they are 18 they have some “seasoning,” and are ready to participate at the next levels. 

Imagine that you have been blessed to work with three generations of a family.  A day or so ago, you spent the entire day with Generation 2, the adult children of your client.  You felt good about the outcome of the meeting and you receive an e-mail that reads in part: 

Dear Cameron, 

Thank you so much for all that you put into our meeting yesterday.  There are moments that happen in life that you know in your heart you will always remember.  Yesterday with my sister is one of those moments.  It is such a blessing to have you in our lives.  Thank you for all you are doing. 

Receiving this communication sure made my day!

Fostering a Hands-On Learning Atmosphere

Learning how to communicate on an adult-to-adult basis is a challenge for family members—starting at the top with Mom and Dad, to children, in-laws and grandchildren.  An immediate goal is to help children begin to discuss financial matters at an adult-to-adult level with their parents. 

Since teens and adults learn by doing, we create hands-on learning opportunities aligned specifically to the outcomes of our client families.  

Talking about money seems to be a taboo subject—many of the people I work with have said talking about sex is an easier subject to address with their children.  Since money continues to be a stumbling block, my peers and I often create a pre-inheritance experience that provides children with money that cannot be consumed so that they can learn to talk about money together.  We focus on helping them learn how to invest money together by making joint decisions and how to engage professional advisors.  This opens the door to the opportunity of beginning to pass intergenerational leadership within a family. 

Creating a Family Fund

Sometimes a family will create what is called a Family Fund or a Family Bank as a means of implementing the business of being a family and ensuring the ongoing development of pre-inheritance experiences. 

This Family Fund or Family Bank may or may not be a legal entity, and the other family governance structures may or may not have legal authority over the funds.  It is up to the family to stipulate in their Heritage Statement and in any bylaws they enact for the formation of their Family Council. 

It is not unusual for families to divide the family governance via the Family Council, which typically contains all of the family, from the Family Fund or Family Bank, which may just be the blood relatives, or a small group of them. 

In these cases, financial decisions are made by blood relations only which tends to stave off the many complications that pop up in the real world, like divorce, separation, re-marriage, etc. 

In my next column I will expand on the process of developing a Family Fund or Family Bank and why it is one of the keys to long-term success in creating a multi-generational strategy for promoting family unity and development.

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