Families who share a large business or who work together with intricate structures of wealth function in what is called a family enterprise.
Their financial, legal, and personal lives are intertwined in some or all of the following complex activities:
- One or more core businesses or operating companies.
- Real estate holdings.
- Investments in various markets around the world, including ownership of commodities, such as precious metals or timber.
- Trusts, financial partnerships, and other entities set up for business, tax, insurance, or estate planning purposes.
- Income generated via dividends, bonds, distributions from partnerships and trusts, or real estate investments.
- One or more family foundations and various social and community philanthropic activities.
- Ownership and management of domestic and international residences and vacation properties.
- Ownership of yachts, art collections, expensive vehicles, wine cellars, and other collectible or hard assets.
These assets and entities are particularly important by the time the third generation develops. Shared assets must be passed on or held in trust for inheritors who may not have been around when the family’s wealth was originally created.
The complexity of shared wealth changes a family significantly. They have to make decisions and interact with each other on a more complicated level than as a regular family or even as a small family business.
The above summary is a paraphrased extract from the book, Strangers in Paradise (James Grubman) which was also recommended last week. The value per word in this book is so high that I wanted to share more highlights with you. I encourage you to read the whole book.
Tweet
Share