Can you imagine having a religion like Christianity without a Bible or other religions without a Tora, Book of Mormon, Science and Health, or Koran? Where will be the documented moral rules and the stories which illustrate them? Or what about a government without a Constitution? Imagine the colonists of the United States trying to come together without the guidelines of the Constitution with its Bill of Rights. After its creation, we have stories in the form of lawsuit opinions which interpret the meaning and application of these laws. I, therefore, propose for the long range patterns of conduct for a family, the formation of a written Family Constitution to document the desired family culture, the guiding principles and later to embellish it with stories of family events and actions by family forefathers (and foremothers) describing the moral commitments of the family members, thus transforming a group of human beings into a sustainable organization with high probability for success, security and harmony. Ironically, the Family Constitution in its Preamble must adopt the religious book that guides the family morals and spirit. For my family, it would be the St. James Bible. Of course, a family of lawyers could adopt it with certain named exceptions if parts were not to the family’s liking. Also, a family in the United States will want to incorporate the Constitution, Bill of Rights, and Declaration of Independence for the secular laws governing family conduct, hereto reserving as exceptions any part of these documents your family wants to exclude. These writings will make it unnecessary to include in your Family Constitution any mission concepts already thoroughly discussed and illustrated within those tomes. At family gatherings, excerpts from those documents may be read as guidance for family members when appropriate. THE PREAMBLE The Preamble for the Family Constitution will set forth the mission of the family with details for each aspect of the family organization. What is the desired mission for: • The leaders of the family? • The children, grandchildren and other prodigy of the family? • The extended family of more distant relatives? • The employees and partners of the family? • The friends of the family? • The community around the family? All of these aspects of family interactions must have a written long range stated goal together acting as a more specific compass bearing for future actions and activities of the family.
BUILDING UP THE FAMILY “CAPITAL”
For the family to survive as a successful family dynasty, there must be a recognition and description of the multiple elements of the family’s critical mass required for survival – consisting of these eight capitals – elaborated in detail in the Family Constitution.
For the long term survival of the family it must commit itself to acquiring eight capitals and must, in its constitution, declare those necessary capitals and declare the strategies they will use to acquire each of them. 1. Real Estate Capital. Every family needs a home base – land and buildings where the family will live at a location which commands the territory where the family wants to enable itself – in a community that the family wants to improve, nurture, and support.
2. Human Capital. How can the family exist for many generations without the requisite human capital? The family needs sufficient births or adoptions or advantageous marriages to produce the future family leader and providers. Systems must be detailed to provide support and help – monetary or otherwise for the family members to undertake the responsibility for birthing and raising children. How will the family establish systems for this and a recognition that the family cannot enjoy lifetimes without babies or the adoption of nieces, nephews or other worthy young human beings to be incorporated into the family and trained into the patterns established in the Family Constitution?
In my family, my son was intensely concentrated on the creation of financial security for he, his wife, and daughter – the family failed to provide for him a financial cushion for raising more children so that he would have the time and resources – housekeepers, babysitters, governesses and other helpers to properly care for the extra children.
3. Intelligence Capital. The Family Constitution must prescribe the systems for educating, training, providing travel experiences and mentors for the young people of the family so they will have the moxie (1) to lead the family in the future, (2) to make the investment and business decisions, (3) to train the prodigy of the next generations and (4) to have exposure to responsible positions where they learn from their mistakes. The Family Constitution will establish the optimum standards for what is necessary for the knowledge and sophistication of the family members.
4. Monetary Capital. For a family to afford the number of children and grandchildren and provide for their enlightenment, the family must have monetary capital. A system must be prescribed for creating and preserving this through many generations and to have a team of financial advisors within or outside of the family to ensure its preservation.
The Family Investment Limited Partnership previously discussed in this book may be used as a protective receptacle for the family investments, which ensures the monetary needs of all the family members with a method of lending and distributing these funds to family members so as not to discourage the effort and stewardship by each family member to support themselves whenever possible.
5. Business Capital. Somewhere within the family, the family must create a business or profession which will create additional money to build up the monetary capital, which supports the needs of the expanding family and its educational requirements. If the family already has the family business, plans must be outlined as to how to preserve it as a family business or how family capital may be invested to back family members in new business opportunities.
Some of our client families prefer to use the investment of their monetary capital as their business. They select noteworthy businesses and invest in their stock and in some cases become active directors of the companies in which they invest.
One large family that had been successful for many generations had a rule of investing 80% of their monetary capital in safe stock certificates and bond portfolios with trust companies managing conservatively and let the family members “wildcat” with the other 20%. Ironically, more money was made from the creative 20% wildcatting than from the stable and assured trust funds.
6. Philanthropic Capital. As previously discussed, every successful family must involve themselves in the improvement of the world around them through a plan established in their Family Constitution. Having their own Family Foundation is a start. Possibly the family wants to create their own active operating foundation to cover an area of philanthropy which they think is not being appropriately sustained, or maybe someone in the family has an illness or died from an illness which the family wants to study and prevent. If so, this will be identified in the Family Constitution. Who will govern the Family Foundation? How will it be set up to teach the spirit of philanthropy to the family members in all generations?
7. Spiritual Capital. How will the family support its adopted religion? How will it express the spirit of its patriotism for its adopted country? Shouldn’t we have in the Family Constitution some elaboration of the religious institution support, attendance, prayer and other involvement in the Family Constitution and some elaboration of how we will support the spirit of our government – help the public officials, involve ourselves in elections, or volunteer for public responsibility? What will the Family Constitution prescribe in these areas?
8. Geist Capital. The above 7 capitals are of little effectiveness unless the family has geist, spirit, get-up-and-go energy to overcome the complacent inertia of rest which slows down or impedes starting any movements in a favorable direction. Someone in the family must commit to having a family constitution, keeping it active and making all family capital segments move forward continually into the next four generations. Unless the Family Constitution documents sufficient capital in all these eight areas, the Las Vegas odds for multi-generation success will be greatly reduced.
ESTABLISH THE NOBLE SOUL FOR THE FAMILY
Include the detailing of the family noble soul into the Constitution. In another chapter, we clarified the need for describing and concurring on the elements of the noble soul for the family. Those written descriptions should be adopted into the Family Constitution, including:
1. The Perpetuation of the Family Name. What if male heirs are not created in the birth lottery?
2. The Family Symbol and Colors. Do we want to allow changes and variances in future generations?
3. The Family Motto. Do we want to add additional mottos in future years?
4. The Family Characteristics. How will we add words and phrases to our Statement of Family Character in the future?
5. The Family Uniqueness. Are we going to add additional unique factors to the family culture in future generations and if so, what?
6. The Family Traditions. What system will we use for adding new traditions into our stated traditions? Will we add Family Constitution considerations at all or some of the family get togethers? How will the database be identified for family members and family friends and advisors who participate in the family traditions and for scheduling and notifying all family members? True art conceals its artistry.
7. The Family Vision. Once the family vision has been created for the next 100 years describing what the family will be doing and what they will have at the end of four generations, what system will we prescribe in the Family Constitution to update this vision?
8. The Family Annual Objectives and Budget. When, where and how will these be agreed upon before the beginning of each new year as part of the events at family gatherings? How much will each family branch contribute each year or how will funds be gathered to support the overall family budget?
9. The Family Guiding Principles. Having been established in the initial statement of the family noble soul, what will be the system for adding and clarifying these from time to time? These, if you remember from previous chapters, are in essence the “10 or more commandments” of the family. In all events, the original statements clarifying the family soul will not only be incorporated in the Family Constitution, but will have provisions in the Family Constitution for updating these each year and discussing them at family gatherings.
THE FAMILY GOVERNMENT
In the U.S. Constitution, each branch of government was detailed in turn. So you will also want to do this in your Family Constitution. The family aspects of family governance will be set forth in Trusts for each generation. These Trusts will spell out the succession of family leaders, how family wealth will be administered and delivered and other government elements. The Family Constitution will be incorporated into the Trusts for the guidance of the Trustees along with the resolutions enacted at the meetings of the Family Councils.
Unfortunately, most of the existing Trusts create dictatorships by individuals or a group of individuals as Trustees – like a Fuhrer without a parliament or a group of Bolshevik dictators without any checks and balances. For sure, the Trusts of a family should include and incorporate the Family Constitution.
A Family Council of all adult family members meeting at least once a year will ensure that all eight family capitals of the family culture are dealt with and progress favorably through time.
Most Family Constitutions will identify all adult family members and certain advisors or mentors to be part of the Family Council which will be scheduled to meet at the family get togethers. (Wherever possible, these meetings at the family get togethers will involve family business with required minutes so as to deduct much of the travel and meeting expenses as business expenses.) You will want to detail the agenda for the meeting which will include among other agenda items:
1. Report of the Managing Trustee of the family governing Trusts and requests for any action.
2. Report by Chairman of the Board of the family business and requests for any action.
3. Report of the Chairman of the Advisory Board of the Family Investment Limited Partnership and requests for any action.
4. Report of the Managing Trustees of the Family Foundation and requests for any action.
5. Report of the education focalizer of the family council and requests for any action.
6. Report of the child rearing focalizer of the family council and requests for any action.
7. Report of the family traditions focalizer for the year and requests for any action, etc.
8. Report from the governance focalizer as to recommended changes in the Family Constitution or other family governance documents and requests for any action.
9. Reports from family mentors and advisors to the family.
10. List of issues for which the family council Chairman wants discussed and resolved. The Family Council will have a Chairman, which is usually the eldest member of the family and a Vice Chairman who is also the Chairman Elect so as to have immediate succession in the event of the sudden demise of the Family Chairman.
SEGMENTS OF LEADERSHIP In addition to the Trustees of the Family Trusts, the Family Constitution must set forth the leadership structures for other key aspects of the family.
THE BUSINESS BOARD The family business will be legally held within a corporation or an LLC or a group of them. The Constitution will describe how the controlling boards of the family boards will be staffed – with some family board members and some highly competent outside board members. The boards will select the President and Chief Executive Officer who shall submit to the others on the management team and professional advisors to the board for approval. The Chairman of the Board shall attend the family meeting to report and record actions.
FAMILY INVESTMENTSTHE INVESTMENT ADVISORS The Constitution shall presume that the investments of the family will be held in a Family Investment Limited Partnership with the general partner engaging an advisory board of family members and persons with investment expertise. The general partner will be Chairman of the board and make decisions when he cannot get a consensus on investment decisions. The general partners will report to the Family Council at its meeting.
THE FAMILY FOUNDATION The Family Foundation will have a Board of Trustees nominated by the Family Council and the Trustees of the Family Trusts. The Managing Trustee shall report to the Family Council.
FAMILY CHILD REARING A family member and committee will be appointed to study and recommend the encouragement of births and assist family members with rearing the young children and make recommendations and requests at the Family Council meeting. FAMILY EDUCATION
The Family Council will designate a person to focalize the education of the family and a committee. They will review the education, training, and travel needs for the family and will make recommendations to the Family Council. One of their considerations will be the designation of “family mentor” role models of leaders in various sectors of family concerns and make arrangements for them to attend and lead discussions at family traditional gatherings. Areas for mentorship will include: investing, financial management, accounting, law, life insurance protection, property and casualty insurance protection, religion, politics, human resources, education, psychology, or psychiatry.
FAMILY GOVERNANCE The Family Council will appoint someone to focalize the family governance and with assistance mentor the operation of the family governance and make recommendations to the Family Council as the structures need to be updated due to changing conditions.
EXECUTIVE COMMITTEE Between meetings, the Family Council will want to appoint an executive committee to handle issues between the Family Council meetings, which may be only once a year. SELECTION OF PEOPLE INVOLVED IN THE FAMILY GOVERNANCE
The Family Constitution may permit family members, extended family members, professionals or business associates to serve as participants in the family governance. Although the Constitution will encourage involving all family members in the process, if a family member does not qualify, a competent person will be chosen and the education focalizer will come up with a plan to train family members for these positions. DISSENSION RESOLUTION The Constitution shall provide that all family members must sign the Integrity Agreement and Confidentiality Agreement to minimize and resolve contentions within the family without fistfights and lawsuits. A family lawsuit will set back the family governance with intensified bitterness for many generations.
SUCCESSION PLANNING
The Constitution will recommend the Family Trusts to spell out who legally will control the family structures. It should provide that the succession plan be revised annually to be sure the Managing Trustee is the right one and the series of Successor Managing Trustees are successfully qualified. We once represented a family from a country that has for centuries been in the path of invading armies. They introduced me to their so-called “patriarch agreement” signed by all family members naming a series of 12 family members in succession who would lead the family on the death of those named above them.
PEER REVIEW
The Family Constitution must face the fact that in human endeavors, inefficiency, dishonesty, and incompetency creep into the system if not carefully watched. Therefore, all Trusts must have protectors named who may remove Trustees without court proceedings if the Trustees do not properly perform.
Also, to double-check the professional advisors, the Family Constitution will provide that every five years, the Family Councils conferring with their current professional advisors will appoint a causality professor to come in and review the work of the current CPA, family attorney, life insurance advisor, property and casualty advisor and other family advisors to be sure there are no omissions, mistakes or better ideas the family may consider.
Every five years, a Pharaoh’s daughter had to sleep with a man outside the family so as not to dangerously inbreed the Pharaoh’s blood strain.
FAMILY HISTORY
The Family Constitution must provide and pay a person to take notes, record, video and otherwise chronicle the family meetings and provide this for future generations and for family members who miss a meeting or one of the traditional events of the family. By doing this, the family will not have to “reinvent the wheel” when they have already resolved an issue in a previous meeting. The family chronicle is also a recognition that the Family Constitution and its processes are important to the family improving its culture.
HOW TO DEVELOP THE FAMILY CONSTITUTION
When I discuss this concept of having a family constitution, I sense a feeling in the groups I talk with that “This is too complicated for our family – therefore it will never happen for us.” Balderdash! If we can play Bridge, Chess, Scrabble, surely a family of relatively intelligent members will be able to figure a way to discuss and implement their own Family Constitution. My suggestions to facilitate this process are these: 1. Step one: As part of creating a noble soul for your family you will, before the matriarch and patriarch die, want to establish and commit to bring the family members together for festive celebrations four times a year – possibly Easter at the end of Winter; Memorial Day at the end of the Spring; Labor Day at the end of Summer; Thanksgiving at the end of the Fall. Then in addition to food, drink, family games – time is set aside for the family to confer over one element at a time of the Family Constitution until the family arrives at a consensus on each. The family may record on video tape or audio tape the discussion and later have one of the writers in the family write up the resolutions one by one until the Constitution is finished. 2.Step two: When the draft text is all finished, have a lawyer or a copy editor work up the draft into a final masterpiece that looks like the U.S. Constitution. 3.Step three: At each family gathering set aside a morning or an afternoon for a reading of the sections of the Family Constitution to see if anyone may suggest improvements on the Constitution or tell stories illustrating the section or concepts of the Constitution. At these sessions too – the audio tapes and video tapes of each gathering are integrated into the family history. Any amendments to the constitution are integrated into the text so that it continues to improve and become more clear. The Constitution review sessions are all segments of the Family Counsel meeting where other topic important to the family are discussed. | 