For many families, managing financial capital across generations can seem like a formidable task. It means making decisions not just about how to protect your assets and grow your money, but also about how to meet the needs of individual family members while upholding family values and positioning the next generation for success. This meeting of goals – preserving, increasing and strategically deploying the family’s financial resources alongside fulfilling and empowering family members – encompass family wealth planning.

Family wealth planning is an ongoing, ever-evolving process – but it doesn’t have to be overwhelming. The right framework can help families build a holistic wealth strategy; one that will engage and empower each family member. Maybe you’re a parent hoping to one day hand over the reins to the family business. Maybe you’re a first-generation wealth creator who wants to build a family enterprise with a legacy of philanthropy. Family engagement and governance is the framework that can help you meet your goals by connecting the dots between your family’s financial capital, values and unique dynamics.

Guidelines for putting family engagement and governance into practice

Successful family wealth planning is not a one-and-done experience, but rather an ongoing practice that evolves with your family. With the guidance of an advisor well-versed in family dynamics, you and your loved ones can pinpoint your priorities and the values that underscore them while creating structures that can help make the family’s vision for the future a reality.

Family wealth planning is a people-centered practice that has five main pillars:

• Family dynamics: How are different family members included in the conversation about managing family wealth? Are there open lines of communication to allow each individual to share their goals, ideas and concerns?
• Family governance and decision-making: Is every family member on the same page in terms of shared values, standards and expectations? Are the roles that individual family members play clearly defined?
• Transition planning: How can your family set the stage for a straightforward transfer of assets and responsibilities?
• Family learning and development: How can you support the growth and development of each family member, the larger family and your communities?
• Philanthropic impact: How can resources be leveraged to make meaningful contributions in your communities and the world that aligns with the family’s mission?

Taken together, these guiding principles can help family members come together and engage in wealth planning. Each individual should come away from these conversations feeling heard and valued. By securing the buy-in and engagement of all family members, families will be better positioned to achieve their desired outcomes.

Find common ground and determine the family’s values

All families possess explicit or implicit values that extend beyond financial wealth, which can inform the family’s approach to holistic wealth planning.

Families seeking to determine which values are most important to them – and are shared amongst members – can start by asking the following questions:

• What matters most to your family? What’s this all for?
• If you had to identify your family’s mission, what would it be?
• What are your favorite family stories? Are there common values that run through all of them?
• What interests, causes, and organizations are important to your family?
• What kind of philanthropic impact do you want to make with your family’s wealth and how can that goal be integrated into the family’s giving strategy?
• What’s your vision for the next generation of your family?

These questions should start to reveal where family members differ – and where they may have common ground. Some answers may come as a surprise, but it’s important to use this exercise as a tool for curiosity and connection rather than judgment. Reflecting on these questions can serve as a starting point in an ongoing process to define the family’s values, which will enable more informed financial decision making in line with their core principles.

Establish a family constitution

Once a family has identified their core values, they can entrench them by developing a family constitution.

Crafting a family constitution involves documenting, in writing, your family’s values, mission statement and vision for the future. They help families sustain strong relationships and mitigate conflict by clearly communicating goals and expectations.

To be effective, a family constitution should be developed over time with participation from all family members. It should also include the family’s main operating principles, to help ensure that each individual family member moves through the world in a way that’s compatible with family values. This applies to both in-person and online interactions.

Consider a social media policy

Many families choose to include a social media policy in their family governance plan. This can include setting ground rules to help families make sure they are representing themselves online in a way that aligns to the established family values and mission.

For example, a family that values humility when it comes to demonstrations of wealth could create guidelines around avoiding social media posts that show off luxury goods, property or even experiences. Such guidelines can help all family members be more thoughtful about what they post online and reduce disagreements about social media conduct.

Create of transition plan

To ensure the smooth transfer of ownership, assets or business leadership from one generation to the next, families need to engage in transition planning. Keep in mind that there are many transitional milestones with each new generation of family members beyond financial wealth transfers; these can include marriage and divorce, starting or selling a business, retirement and more. It’s important to consider what transition will encompass in these kinds of scenarios.

A successful transition plan will entail planning well in advance and making gradual steps forward. For example, if there are younger family members interested in joining the board of the family business, rather than having them take over a position in a time of need and with little experience, a transition plan might outline a period of observation and steady increase in responsibilities. A strong transition plan will scaffold major changes into manageable and gradual steps, and leave room for budding leaders in the family to cultivate crucial core competencies. This approach helps the next generation feel empowered to take on their new roles. The same concept applies to other kinds of transitions. If a member of the family is newly engaged, for example, the family may want to begin meeting with their team of professionals such as their estate attorney and accountant to plan for this new addition to the family. Being thoughtful and proactive about transitions can help mitigate conflict, confusion and stress during periods of change.

We can help

Families that have built and managed economic wealth over multiple generations have not solely thrived because of their business and financial achievements. They also attribute their success to working together as a family, transmitting a legacy of shared values and developing new generations of leaders. This legacy extends beyond just the family, empowering members to leverage the family’s wealth to make a meaningful philanthropic impact.

Having a framework for family governance gives families a playbook that can help them navigate family wealth planning as a team. By understanding family dynamics, setting clear expectations and preparing for the future, families can confidently achieve their goals while staying aligned to their values.

Let us help you create a holistic framework to manage your family’s wealth. Connect with your J.P. Morgan advisor to start the conversation about your family wealth plan.

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