Family Office Management

Family charter essentials

BY ,   |  WEDNESDAY, 15 JAN 2025    2:36PM

Family charters are important components to families' governance structure. They are documents that families can use to help them with building guideposts, decision-making rules, and codifying a family's values, mission, and vision.

Family charters can also help define the relationship between critical resources of a family such as the family office.

This paper looks at several key areas that families should consider when developing or stress-testing a family charter.

What is a family charter?

A 'family charter' is a written statement that serves as a record of a family's heritage, culture, ambitions for future success, conflict resolution guide, ambitions for future success, and its culture.

Many families, particularly those with family offices, will be familiar with the concept (also known as a 'family constitution' or 'family protocol').

By whatever name, this document, at its core, will be the family's mission statement, providing some clearly stated aspirations for current and future generations. A family charter also typically sets out broad principles around governance management, and the use of family assets and profits.

It might also include specific policies on things such as investment, education, the family business and the resolution of conflict within the family.

What does a family charter look like from the family's perspective?

A family charter is a humanistic, as opposed to a legalistic, document. A lot of family wealth is held in legal structures, which are constituted by shareholders' agreements, trust deeds and other documents that are drawn up and interpreted by lawyers.

These structures, while very important for commercial and legal reasons, may not resonate with the family in the same way as a family charter, which is expressed in non-legal terms and often encompasses and embodies emotional considerations rather than just purely legal, financial and commercial ones. This is not to say that a family charter cannot be drawn up by a lawyer. In many cases, they are. But fundamentally, it is not a legal process.