March 1, 2020 Guest Author

The Importance of Family Governance

The old saying “Shirtsleeves to shirtsleeves in three generations,” means family wealth that’s built by the first generation is eroded or even destroyed by the third generation, which squanders the assets it inherits through reckless spending, poor investment decisions and other mistakes.

The result: The famiily ends up back where it started, with the same amount of wealth (or less than) it began with generations ago. Unfortunately, it’s not just an adage.

We’ve seen this type of wealth destruction play out among many families–even those with relatively modest amounts of wealth–whose members tend to have their own conflicting agendas. They have (to varying degrees) different expectations, wants and preferences. Moreover, there are commonly clashing perspectives on how best to manage and spend the family wealth. There may be family-owned business interests, and different family members may have differing ideas about the future of the company.

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