SUCCESSFUL FAMILIES BECOME A LEGACY WHEN THEY ...

1. Follow a family strategic plan

Each family requires its own family plan which is supported the development of the family's governance framework.  The plan consist of various element, some mentioned below. 

• The vision and purpose of the family

• Mission statements, incorporating the business, development of the individual family members, philanthropic investment and the brand positioning of the family

• Long, medium and short term goals

• Values of the family

• The guiding principles applicable to the future generations

• Constitutional documents such as the family constitution. 

2. Ensure inclusive decisions

A long-term risk that the family faces is that a single person holds all the reins in the family business. The risk is that in the event of the death or incapacitation of such a person, the family members may not be able to take responsibility for their wealth. Various family members should carry different roles and responsibilities with in the family but also in the management of the wealth.

The vision statement, or purpose, of the family will provide a constant guiding light for future generations on the direction to be followed. The vision statement on its own cannot provide decision making processes but it ensures clarity in terms of purpose. Family governance structures provide the necessary framework to ensure that family members participate in decisions and thereby ensure longevity.

3. Adopt and endorse a family constitution

The family governance framework is embodied in the family constitution. The constitution is usually not overly complex but identifies, defines and regulates the family governance framework. The constitution will specify in broad terms the scope of the family’s decision-making processes, ensuring this does not override or conflict with other important governance mechanisms the family may have in place. The alignment with trust deeds, company constitutions and foundation rules needs to be managed. Policies and committees will be established to support the family constitution and the family’s strategic plan.

4. Implement a family governance framework

Governance framework refers to policies and procedures agreed upon by all members of the family. The family governance framework sets out the ‘how, what, who and when’ for the family to govern itself and make decisions. Family governance structure may include:

• The family council

• The family assembly

• A description of how the council and/or assembly will function

• How many family members will constitute the council and where will they be drawn from

• Minimum age or requirements to be a council member

• Frequency of meetings

• Whether members of the council must be in the bloodline, the removal or replacement of family members that are not exercising their responsibilities appropriately and in the best interest of the family etc. Governance structures endure across time and situations, whereas individuals do not.

5. Ensure the involvement of family members from a young age

Family assemblies and, where practical, council meetings should include younger generations. The family can include multiple generations in committees, philanthropy or focus groups. The active education of the whole family will significantly contribute to the success of the family’s fortunes for generations to come.

For further reading, please email Turnstone for your copy of The Practical guide for wealthy families and family offices by Paul Roper, Roelf Odendaal and Heinrich Odendaal at £12.00 + postage.

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