It’s More Than Just About Family and Business
There are some subjects I cover pretty often in these blogs, because much of the work I do revolves around areas where families have predictable challenges that I try to help them work through.
Regular readers know that I’ll often return to such staples as communication, governance, family meetings, harmony and working together.
Well lately I’ve been seeing and hearing much more about the subject of ownership, so that’s where we’ll turn now.
The Forgotten Circle?
I can’t believe it’s been over three years since I wrote Ownership: The Forgotten Circle of Family Business. I guess that at that time I was noting an absence of discussion on this topic, so it seems that may no longer be the case.
A few months before that, I penned Pruning the FamBiz Ownership Tree, in which we looked at the issues that arise over generations where ownership of a business ends up coming down to family branches with different involvement in the business, and how those issues need to be dealt with somehow.
But today I want to look at a specific area around ownership, and that is the way that the feeling of ownership is so important for families to recognize, if they are expecting their following generations to maintain their family legacy.
The Ownership – Legacy Connection
I typically make one similar assumption when I begin working with any family, which I normally end up validating early on. That assumption is that the leading generation of the family, the ones I sometimes label the “NowGen”, have at least some interest in creating a lasting legacy.
Those words mean different things to different people, so let’s look at this more. For me, a lasting legacy is one where even after the NowGen has left this earth, there is some continuity of what that generation built, grew, and/or stewarded, by the “NextGen”.
Let’s look at the opposite of that, which sometimes occurs, and which is also fine if that’s what makes the most sense for that family.
If the family wealth is to be split among the descendants and then they will all each go their own way, then there will be little or no legacy left.
In most families in what some call the 99%, this is standard practice.
That Feeling of Ownership
When a family attains a certain level of wealth, the idea of maintaining some sort of legacy will often come up.
Such families will then typically consult a number of professionals who are experts in the area of protecting that wealth so that it may then be preserved for future generations of the family.
One of the details that gets dealt with at that time is the ownership of the assets that make up the financial wealth, and this is where some important considerations sometimes get lost along the way.
“Family specialists” like me who work with the family members on how they will govern the family wealth often walk into situations after most or all of the ownership details have been cast in concrete.
And in situations like that, we typically note that there were some opportunities to make the future owners actually feel like owners.
Just Trust Me On This, Kids
Of course when the offspring are still children, it is normal for their parents to make important decisions for them. The problem comes up when those children become adults, and yet their parents continue to treat them as children.
I always encourage parents to work on having adult-to-adult relationships with their offspring, because a “one-up, one-down” framing can be crippling to the development of the rising generation.
Growing up in my family, I had legal papers put in front of me and was told to just “trust me, sign this”, and many others went through the same thing too.
Feeling Like You Actually Own It
Getting back to those experts who prepared legal documents about the wealth, they understand the differences between legal ownership and beneficial ownership for assets in a trust, and my point here is that at some point those beneficiaries need to have this explained to them as well.
Who will share ownership of what, and when those changes are expected to happen are also key.
To preserve a family’s legacy, feeling like you own it cannot be overlooked.
If the debate is to share this information now or later, my advice is that sooner is always better.