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Holding it all together


A family constitution can make sense for wealthy families, and a Family Office can be proactive in supporting this project, writes Barbara R. Hauser.


I


n Asia, families are beginning to turn to family constitutions as a tool to keep the family (and family business) together, adapting a ‘Western’ concept into their own close family systems.


Families are increasingly aware of the harm caused by internal conflict in times of generational transition. The oft- repeated proverb of ‘shirtsleeves to shirtsleeves in three generations’ resonates with families around the globe. Motivated families are seeking information about global ‘best practices’ to prevent that destructive family conflict. When a family decides to create its own family


governance, it should begin with a family constitution. Families should view themselves as a small country and ask themselves what rules they would make and how they would make them. Families use various terms to describe a family constitution: charter, mission, rule book, code of conduct, and so on. I promote using the word ‘constitution’ to keep the connection with country governance.


50 FAMILY OFFICE: THE FUTURE A family constitution should be the core set of


rules about: ƒ what kind of decisions family members will make to apply to the family ƒ how they will make those decisions ƒ what process they will have for conflicts. Families might also want to agree on certain


areas where the family will not interfere because those areas are kept as individual freedoms (such as in the Bill of Rights in the United States Constitution). Some family constitutions are more than 50


pages long. Some families delegate the wording entirely to a consultant or a lawyer. Some firms are even selling family constitutions in book form. These do not usually “suit” the particular family, and the family loses the benefit of coming together to go through the process. Family constitutions are most successful


when the family does the work (with the guidance


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