Family governance
Family governance is a way for a family to set shared expectations and make decisions about its wealth and enterprises. For owners of businesses, real estate and private investments, the term can include family values, roles, policies and planning for succession. Families may use these practices to address how wealth passes to descendants and how family members take part in decisions.
How it works
Family governance organizes how a family makes decisions about wealth and enterprises. A family may use a family council, written policies, clear roles and responsibilities, and a succession plan. Governance procedures can also include a vision, mission, strategic plan, board assessment, outside directors, and conflict of interest and ethics policies.
Where it shows up for owners of businesses, real estate and private investments
Family governance can apply where a family owns enterprises or wealth together. Discussions may address the family's direction for an enterprise, how wealth passes to descendants, and whether descendants can manage what they inherit. Philanthropic concerns may also be part of the discussion.
Practitioners describe a shared vision rooted in family values as one building block of family ownership. Governance procedures may connect that vision with a strategic plan, succession plan, and defined family roles.
Points that are easy to confuse
Family governance is a process for decisions and expectations, while a family council is one possible part of that process. Written policies, outside directors, and a succession plan are other possible components, not the definition of the entire system.
Family governance can address family wealth and enterprises. The term can include philanthropic concerns, but those concerns do not define every family's governance procedures.
Common questions
What does family governance cover?
Family governance covers how a family makes decisions about wealth and enterprises. Procedures may include family values, vision, written policies, defined roles, a family council, and succession planning. Families may also address how wealth passes to descendants and philanthropic concerns.
Is a family council the same as family governance?
The broader process may also include written policies, clear roles and responsibilities, a vision, succession planning, and other procedures for family decision making.