Family consultation strengthens family ties
Communication is essential to preventing conflicts. Family consultation, giving family members the opportunity to speak openly and honestly about their thoughts, feelings and expectations, can help prevent misunderstandings and will probably have a positive effect on family ties. It goes without saying that there are numerous advantages to regular family consultation:
- Cooperation and close bonds: Open communication is good for cooperation and harmony within the family. Problems can be tackled and decisions made together.
- Problem-solving and decision-making: Talking about challenges and possible solutions enables family members to share their different viewpoints and encourages them to find a solution together that everyone can agree on.
- Trust and understanding: Communication helps to build trust and strengthen relationships. Lack of information – often a source of frustration – can be replaced by understanding.
Family charters: good agreements make good friends
In a family business, consultation is often not enough: it’s advisable to make more binding agreements, documented in a family charter.
The family charter reflects the values that are important to the family, the vision for today and the future, and the rules of the game in relation to the family business. It is a guideline setting out agreements that family members must adhere to.
Clearly, such a charter requires some thought and it goes without saying that it must be tailored to the family. The family charter has a number of strengths:
- Preventing conflicts: the family is prompted to make clear agreements in mutual consultation. The charter serves as a guideline for the family and the business.
- Transparency and clarity: The charter provides transparency and clarity about the expectations and responsibilities of each family member within the business.
- Continuity: The family charter helps ensure the continuity of the business by setting clear rules on succession and the transfer of shares, for both active and non-active members in the family business.
Note that a family charter is not a legally binding document. In a business context, it will therefore always be important to draw up a shareholders’ agreement – which is legally binding – with the necessary care and attention.
General inheritance agreement
A general inheritance agreement involves making arrangements about the distribution of the estate in consultation with the heirs. It gives heirs the opportunity to ask questions. The reasons for unequal distributions (for example because gifts made in the past are taken into account) can be explained while you are still alive.
Again, it’s clear that communication can ensure that heirs aren’t presented with unpleasant surprises after your death. A general inheritance agreement can be useful for:
- Preventing conflicts: By making clear arrangements in advance about the distribution of the estate, you can prevent arguments later on.
- Fair treatment: Involving all your heirs ensures that they feel heard and respected, giving them the opportunity to talk and understand.
- Transparency and clarity: instead of uncertainty and surprises, the result is transparency and clarity about the winding up of the estate, helping to ensure harmony.
Prevention is better than cure
Conflicts can often be avoided by open communication during your lifetime, giving heirs the opportunity to enter into dialogue, ask questions and understand certain decisions that have been made.
By making clear agreements while you’re still alive in the form of a general inheritance agreement or a family charter, you can preserve harmony and create clarity concerning views about the family business.
Would you like to know what a family charter or a general inheritance agreement could mean for your situation or how you can structure a family consultation? Feel free to contact the Private Client Services team.
