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Strength in numbers: The benefits of a Family Charter

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Summary

Why working with your loved ones to chart a course for your wealth is worth the effort.

3 min read

A Family Charter is a great way to try and improve how your money meets your goals while bringing your family closer together.

Creating a Family Charter involves working with your nearest and dearest to draw up an ‘operating manual’ for your family and its wealth. It should set out a shared understanding of your vision and values, what you believe wealth is for – and not for – and the framework within which you can make decisions together.


Can we be frank?

Our experience of working with clients to produce such charters has shown that frank family discussions about their differing values, ambitions, hopes and fears, can forge firmer relationships and make it easier to manage the family fortune for the long term.

Rachel Harrington, a Director at the Coutts Institute, explains, “Unlike your will, a Family Charter is not a legally-binding document. Instead, it’s designed to act as a ‘living’ guidebook or operating manual for the family. It encourages you to ask, ‘Who are we? What’s important to us?’”

“It’s not always easy to talk about money with those closest to you, but studies show that a lack of communication can damage trust and potentially lead to the erosion of your wealth over time.”
Coutts Institute Director Rachel Harrington

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Both the journey and the destination

While the document itself is valuable, the biggest benefit often comes from the discussion that takes place to draft it. It gives everyone involved the opportunity to share concerns, debate issues, decide on the preferred approach and solve problems together.

Rachel says, “It’s not always easy to talk about money with those closest to you, but studies show that a lack of communication can damage trust and potentially lead to the erosion of your wealth over time. Talking through your family’s values and thoughts on the long-term vision and purpose of your wealth can help build firmer foundations for the future.”

As well as setting out a clear vision for your wealth, a Family Charter can help you:

  • agree how you communicate with each other effectively on the big issues 
  • identify opportunities for family members to learn more about their wealth and how it can be used
  • ensure everyone understands their role and responsibilities towards the family’s wealth

“As with any good strategy, the idea is to plan for tomorrow’s problems today,” continues Rachel. “The best time to write a Family Charter is therefore when everyone is getting along well and can focus on the future in a positive way.”
 

Where to begin?

You might choose to start the discussion by telling the story of how the family’s wealth was created. This can really help future generations understand the family’s journey and what is important to you.

A charter can also capture the key principles of how you want the wealth to be used, reflecting your shared values. For example, you might want to help your family by providing deposits for their first homes, use the money to help others start a business, or support social or environmental causes that you care about.

The document can also help you and your advisers decide on the most appropriate structures to put in place – such as wills or trusts – to ensure your family’s vision is fulfilled.

If you’re interested in exploring a Family Charter further, please contact your private banker.

A Family Charter can be a highly effective ‘operating manual’ for your family and its wealth. It helps you agree a shared vision for your fortune and the best ways to ensure it meets your agreed goals.

It can also help bring your family closer together as you build firm foundations for the future. The conversation involved in producing such a document covers many useful topics including communication, concerns and key responsibilities.

About Coutts Institute

We understand that wealth means more than money. The Coutts Institute focuses on the governance of wealth - helping family businesses succeed, helping clients fulfil ambitions for their philanthropy, and preparing the next generation for inheritance.

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