Family wealth rarely fails because of poor investments; more often because of disputes. A family charter sets rules before the conflict arises and is therefore the core of what is called family governance.
What belongs in it
The family’s values and shared goals, the role of the business or wealth for coming generations, bodies such as a family assembly and family council with their tasks, rules for family members working in the business or the family office, succession principles, information rights and distribution policy, and a conflict resolution procedure, for example mediation before going to court.
Enforceability
The charter itself is usually a moral commitment. What must be legally enforceable belongs in contracts: voting agreements and pre-emption rights in a shareholders’ agreement, succession rules in wills and inheritance contracts, purpose and beneficiaries in the deeds of foundations or trusts. A good charter refers to these documents and stays consistent with them.
Process before document
The value of a family charter lies more in getting there than in the result. Conversations between generations clarify expectations that would otherwise remain unspoken. Reviewing it at set intervals and after events such as marriage, death or the sale of part of the business works well.
Systems
Board resolutions, roles and structure documents should be kept in one place with history so it remains traceable who decided what and when. This applies especially to private trust companies and family foundations with family members on their boards.