The Size of Your Family can Impact Family Governance - Blair Trippe
Having a large net worth comes hand in hand with high-stake decisions and large responsibilities.
When a family has a high net worth, discussions on allocating or gifting the resources comes into play. Some families may not know where or how to start and so professional family governance assisting would be beneficial. Other families may already have this figured out for themselves.
The decision for formal family governance can be a complicated one. A family and firm have to decide whether or not this type of intervention is necessary.
Blair Trippe, managing partner at Continuity Family Business Consulting describes one of the main factors that affect the decision to seek professional help: the size of the family. Advisors need to be take this into account when recommending a formal solution to a family.
“Start by identifying who’s in the family.
“How many family members are actively involved in decision-making? If it’s a small number, like a family of 5, their decision-making process may not need formal structure.
“If the family is larger and involves distant relatives, cousins, and spouses, it can be more difficult to get everyone on the same page. For these larger families, more formal governance may be needed to achieve alignment and efficient decision-making.
“However, it’s important to note that each family works differently. For example, some of our client families function as an autocracy where the patriarch or matriarch of the family is in control and makes all of the decisions. This strategy works well for some families and they may have no appetite for change at the present time, so developing formal governance wouldn’t be of interest to them and may actually trigger conflict.
“For others, especially those anticipating a general transition, there may be a need or desire to get input from a broader range of family members. In this case, setting up a process to discuss and make upcoming decisions may be desired on an ‘as needed’ basis. As mentioned earlier, family governance is not wanted and/or needed in all families and should only be suggested when there is a clear current or future benefit.”
