Try to forge a common understanding of the reasons underlying the wealth disparity.
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These discussions are likely to touch on issues of respect, entitlement, values congruence, differing perceptions of history and a host of other difficult topics. It’s often useful to have a facilitator experienced in family wealth advising to help the siblings, and their branches, find a way to understand and accommodate the inevitable differences among them
Discuss how wealth should be used to achieve the shared family vision.
Find opportunities for purposeful dialogue around these topics. Individual branches may want to first discuss this among themselves in order to clarify their own values concerning wealth. Inter-branch loans should be carefully considered and managed by a third party if possible.
Institutionalize decision-making.
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For example, if education is a family value, the wealthier siblings might create a shared education fund to benefit the children of the less well-off siblings. Similarly, if entrepreneurism is valued, a family venture fund might be created. These and other similar funds could be defined and their objectives articulated in a family charter. A family council might be created to manage and govern the application of these benefits through succeeding generations. There are many models that families can use to manage shared wealth, such as family foundations and family offices.
Parents should make their intentions clear and seek proper estate planning advice.
So often, the futile search for what’s “fair” ends up creating an even more difficult situation for the next generation. Parents should have the courage to tell their children why they have made specific decisions and allow them to share their thoughts. In addition, parents must understand that there’s a limit to what they can do to make things “fair.” They must also instill in their children the responsibility to treat each other fairly.
Create guidelines for situations like shared vacations, use of shared vacation properties and holiday gift giving.
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The guidelines should enable each branch to participate in a manner that is affordable and reflects the family’s shared vision.
Create standards for wealth preservation
Consider estate planning, insurance, investment management, inter-branch loans, prenuptial agreement requirements and social behavior (for example, sobriety, risk taking). Provide access to appropriate professionals for all branches.
Professionalize the family business.
Create a proper, independent board and have well-articulated policies governing executive compensation, dividend distribution, family employment and conflict management.
