Charter for high net worth families. What for? And what are its contents?

A Family Charter should not be looked at as a piece of literature to work on, perfect and store in a drawer. It has a specific use and it should address a minimum of critical and important matters of concern to the Family.

1- What is the Role of a Family Charter?

(a) A Family Charter will help reduce any future frictions among family members. It entices them to keep the bond on, and the business in the Family; and provide them with a taste of the ingredients that have been behind the success of the business in the past, hoping that they will follow suit and that the generations to come will perpetuate such success and secure a stream of income to the Family members year after year.

(b) It is by all means a Guide; a guide that provides directions for Family members with respect to the Family business and assets, addressing all their aspects and suggesting roadmaps to follow for the achievement of the Family objectives.

(c) It is also a Family Bonding Agent. The earliest a Family Charter is entered into by Family members the best. It is essential that they do that at a time when the least issues are pending among them, so that they feel relaxed when attending meetings and going through discussions to address all matters of concern, with an open spirit, realistic approaches and a determination to reach a consensus over all topics to be included in the Charter. It builds a bond among the Family members and enhances the solidarity that is so crucial to the perpetuation and consolidation of such bond.

(d) Governance rules and principles are no longer the privilege of, or the requirements in, listed corporations. They are useful in unlisted corporations and even in private companies and also, why not, in NGOs, and Families. A Family Charter is a Family Governance Organizer. In fact, it is a genuine governance tool. It addresses aspects regarding the functioning of a Family, its meetings, decisions, etc… It is a framework for Family members’ inter-actions. A Charter set for the Family members is a forum to exchange ideas and opinions and take decisions over issues and matters of mutual interest and concern, in an orderly and conclusive manner. A proper governance in running the Family affairs yields excellent results; it encourages and instills transparency and openness in administering the Family assets.

(e) It is also a Succession Planner. It helps Family members plan their way forward. What are the Family bodies? Who manages them? How will the Family manage its succession? How will the assets be devolved once a Family member passes away? Who will get what? Moreover, which branch of the Family shall, if any, be entitled to lead? How does the control of a Family operate?

(f) It can also be a Complementary Arrangement to more formal documents. In the event all or some of the Family members have already entered into some types of more formal arrangements, regulating their common business or assets; such as articles of association of their jointly owned companies; or shareholders agreements, etc…they can provide in the Family Charter for all items that have not been addressed in such documents. A lot of small details may not be appropriately set out in organizational documents that are typically public documents, and/or documents that are required at public official departments. Family secrets are better kept in side documents to whom only a limited number of persons have access. Hence, the Family Charters are ideal venues to house such secrets.

2. What are the Contents of a Family Charter?

Family Charters may never be identical, due to the fact that they are reflective of contents and concerns that are not unique, and are sometimes very different depending on the families, their belongings, creeds etc…. Below are some of the items that may be included in Family Charters; each Family may pick and choose, amend, add and cancel as best fits its particulars and specifics:

(a) Family Vision and Mission Statement

Setting out, from day one, the Family Vision and Mission Statement helps the coming generations to use them as guidelines so that the main focus set by the main settlor, to become with the years an ancestor, is not lost over the years. The Family Vision is a genuine compass to show the way to the Family members and, more importantly, to tell them every now and then how far off they are from the borderlines that the Mission Statement will have drawn, as well as from their destination.

(b) Family History

It will be interesting and rewarding for the descendants in the Family to know where their ancestors came from, where are their roots. Therefore, the Family Charter may elaborate on the Family background, setting out, when possible, a Family tree and, where applicable, a list of those Family members who have left their prints in the Family, in their community and in their country. Family history is probably the most unique and distinctive feature of what Family members have in common; it is made of ancestry, legacy and heritage.

(c) Family Values

Moral, economic and political values may be included in a Family Charter, such as: Faith, Solidarity among Family members, Solidarity towards the public at large, Philanthropy and Charity, Patriotism and Nationalism, Integrity and High Morals, and as many other values as the culture of the Family wish to have embedded for its members to live by.

(d) Family Assets and Family Business

Family Charters deal extensively with Family assets. These are of many types, depending on the Family’s wealth magnitude and investment policies and strategies. A comprehensive assets portfolio typically includes productive corporate assets, non-productive corporate and non-corporate assets, liquid assets and any other type of movable and immovable assets. Family Charters address the assets matter in terms of their ownership, preservation and maximization. What assets to acquire? to keep? to protect and how? what assets to dispose of and when? Family Charters may also stipulate that some real assets may never be sold, but rather leased out in order to generate income to sustain Family expenses.

(e) Miscellaneous

In addition to the above, the Family Charter may include other topics, such as guidelines for charitable and philanthropic endeavors; Family members’ health care; Succession Planning, grounds for the amendment of the Family Charter and procedural means and ways for effecting such amendment, as well as any other matter that a Family feels that it needs to be raised or regulated in the Charter.