Let’s revisit the Robinson family’s wealth planning journey. 

In previous articles, we explore how the family defined their vision, aligned on goals, and balanced diverse family perspectives – all through the guidance of the Conduct Formula. In this article, we’ll unpack the practical steps the family took to achieve this vision. 

Using the Family Wealth Navigator and Purpose of Wealth Model, they gained a dynamic view of their wealth, creating tailored “algorithms” for each asset category. This laid the foundation for the structures needed to hold, diversify, and transition their wealth across generations.

Before diving into their governance ecosystem, let’s examine the technical aspects of their current legal structures in the chart below. (But remember that these structures are a starting point. The Robinsons will continue to refine their legal planning as their needs and circumstances evolve.)

The Robinsons have established a trust (entitled “the Business Trust”) to preserve and manage their primary asset, Robinson Renewable Energies. This trust reflects the vision and work of John and Emma while ensuring continued business success across generations.

Designed to be inclusive, the trust welcomes both family and non-family members to participate based on their interest and skills. Family members can engage at various levels, whether as shareholders, board members with strategic oversight, or executives with day-to-day responsibility. This allows for a fair distribution of income and decision-making power among all involved.

In addition to the Business Trust, John and Emma created four Nest Egg Trusts: one for themselves and one for each of their children. These trusts serve as a financial safety net and provide funds to support their children and future generations. While not currently focused on wealth accumulation, they could potentially serve that purpose in the future.

The Robinsons have also established a “Family Bank” to provide funding for family members’ entrepreneurial ventures (such as Daniel’s plant-based protein venture) and other meaningful pursuits. 

The Family Bank functions as a mutual fund and is structured as a private foundation. It offers opportunities for diversifying the family’s business through venture capital opportunities.

Beyond these structures, John and Emma directly hold their remaining assets, such as personal assets (a boat and cars), commercial and personal real estate, art collections, and investments portfolios. They have a will in place that temporarily benefits the surviving spouse until the succession plan is filled. Additionally, they maintain a separate account for their charitable activities.

The family has also navigated the Family Legacy Cycle to address both individual and collective financial and emotional challenges. This process has helped them implement their family constitution, which now acts as a “top down” framework to align all family members on shared values, principles, and decisions.

The journey of building legal and governance structures is like assembling the gears of a clock. 

Like the carriers, the legal structures hold the family’s assets, while governance provides the energy that sets everything in motion. Governance is the feather that breathes life into the system, allowing each component to work seamlessly together.

The Robinsons are ready to move forward with establishing governance bodies, utilizing effective tools, and formalizing key processes. These steps will align their family, business, and investment governance with their long-term planning goals, ensuring that all parts work together in harmony.

 

Navigating diverse aspirations: Aligning family governance with evolving roles and family values

While the Robinson family is aligned on a long-term vision for Robinson Renewable Energies, the transition to the next generation presents challenges. The business is not only their most valuable asset financially but also represents their family culture and commitment to innovation and social impact. The family wants to preserve the business within the Business Trust, but the transition from John and Emma to the next generation brings significant complexity.

Michelle, Daniel, and Sophie each have diverse interests and capabilities, which may lead to conflicts as they prepare for their roles in the family’s future. Michelle wants to be an executive in the business, while Daniel is focused on his academic career and personal ventures. 

Sophie, a doctor and mother, is unlikely to take an active leadership role but is adamant about fair participation in the business proceeds. Even if she is not directly involved, she wants to guarantee such opportunities for future generations – particularly her children.

This divergence highlights a key governance challenge: how to allocate roles and responsibilities based on capability and interests while ensuring fairness across the family. 

Governance planning must address these varying aspirations, ensuring that those with the necessary skills and experience can take on leadership roles, while others can still benefit financially or participate in limited ways, such as through board membership or shareholder roles.

At the same time, the Robinsons recognize the need for a mix of family and non-family talent to ensure the future business success. Non-family members must be integrated into key leadership roles to complement the family’s strengths and develop future successors. 

It’s also important to create a system that attracts and retains both family (like Daniel) and non-family talent by offering meaningful roles and opportunities for personal and professional growth.

Governance, the Robinsons agree, must provide clear opportunities for involvement based on merit and interest, with mechanisms in place to ensure both family and non-family members can contribute effectively. This approach will not only help resolve potential conflicts but also create an environment of empowerment and collaboration, enabling the family to uphold their legacy – and adapt to the needs and aspirations of future generations.

 

Balancing collective and individual paths:
“On-platform” versus “off-platform”

A key challenge in the Robinson family’s governance planning is deciding which assets and activities should be managed collectively (“on-platform”) and which can be pursued individually (“off-platform”). This balance reflects the ongoing challenge of preserving the family’s unified legacy while allowing autonomy for personal ventures, businesses, or philanthropic goals.

John and Emma must now decide how to pass down their significant personal assets. Robinson Renewable Energies is a clear candidate for the joint platform, held within the Business Trust to ensure it remains a shared family resource across generations. The family is united in their desire to steward this asset collectively, not only for financial gain but also as part of their shared vision of innovation and social responsibility.

But the family understands that governance is not just about structure – it requires strong relationships and cooperation. Maintaining a joint platform demands significant collaboration among family members, and there is a risk of underestimating the effort needed to sustain it. Assuming financial ties alone will draw disengaged or distant family members into family life is a flawed approach to governance.

Checks and balances, along with input from internal and external parties, are essential for ensuring the system works effectively. These mechanisms must allow for flexibility, including the possibility of dividing the platform or creating break clauses if necessary. This prevents the family from feeling trapped in a rigid system and allows for adjustments that align with evolving family dynamics.

To address the different ambitions of the Robinson children, the governance plan must clearly distinguish between what is managed collectively and what can be pursued individually. 

The Business Trust ensures that key assets like Robinson Renewable Energies remain a shared family resource. In contrast, the Nest Egg Trusts offer flexibility for future adjustments and could potentially serve as individual “umbrellas” for wealth accumulation within each family branch, if John and Emma choose to grant their descendants more control. This would involve appointing the trusts as beneficiaries of the Business Trust and bequeathing assets currently held directly by John and Emma (either during their lifetimes, or upon their passing).

It’s important to ensure that participation in the joint platform remains attractive to all family members. Financial returns, shared decision-making, and access to collective resources, such as the Family Bank, will keep family members like Daniel engaged. This flexibility empowers individual members and supports their personal and professional growth within the broader family structure.

Philanthropy is another area where the family must balance shared values and individual pursuits. While John and Emma may want to create a family foundation that reflects their vision, the governance plan should also allow individual family members to pursue their own philanthropic interests. This balance ensures unity while still giving space for independence.

Ultimately, the balance between “on-platform” and “off-platform” wealth and activities will shape the family’s future. Clear guidelines and flexible governance mechanisms help navigate this dynamic, ensuring a shared legacy while allowing room for individual growth. As their system evolves, the Robinsons will continue to refine this balance, securing their long-term success across generations.

 

Bringing it all together: the Robinson family’s Anatomy of Governance

To address their diverse challenges, visions, and aspirations, the Robinsons have developed a comprehensive family governance system. This system is based on their Anatomy of Governance chart, which outlines the key elements needed to navigate succession, stewardship, and decision-making effectively. The chart captures the critical governance bodies, processes, and roles that will guide the family through this transition and ensure alignment with their long-term goals.

In designing their governance system, the Robinsons have established various decision-making, advisory, and mentoring committees, along with a strong system of checks and balances, including a protector function. These mechanisms safeguard both family and business interests by providing oversight and ensuring that decisions align with the family’s long-term objectives.

The family understands that a well-rounded governance structure requires input and oversight from both inside and outside the system. By combining trusted family members with external advisors and professionals, they ensure their governance system benefits from both intimate understanding of family dynamics and objective expertise needed to navigate business complexities.

The balance of internal and external perspectives will help the family manage potential conflicts, prevent power imbalances, and maintain accountability across all roles. This chart provides a detailed overview of the core elements of their governance structure, illustrating the key bodies, roles, and processes that will support the family in their transition and stewardship journey.

1. How family and business governance work together

The family establishes a comprehensive governance system to ensure Robinson Renewable Energies remains a cornerstone of their legacy. 

This system balances family involvement with professional business management, ensuring the business aligns with the family’s vision while remaining protected from excessive family interference.

Let’s break down the steps they take to achieving this.

• Defining roles and responsibilities: John and Emma structure their governance so the family makes strategic decisions—such as mergers or IPOs—while entrusting day-to-day management to the board of directors. By transferring shares into a trust, they ensure their strategic vision is upheld, even if no family members are involved in future management.
• Establishing the family council: To represent all family members, the Robinsons create a family council to deliberate on strategic matters. This council includes all family branches and evolves as the next generation takes on leadership roles. Qualification requirements, such as age and professional experience, ensure family members contribute meaningfully. Younger members are involved as observers, preparing them for future roles.
• Integrating governance with the Business Trust: The family council integrates into the trust’s governance through an advisory committee. This committee must approve any key decisions made by the trustee regarding the family business, ensuring the family’s strategic input is respected.
• Ensuring control and oversight: A family protector, Robert, oversees significant financial decisions to ensure they align with family and business interests. With deep professional experience, financial independence, and close ties to the family, Robert is ideally positioned to serve as a mentor and mediator. His ability to replace trustees and his select veto powers provide additional safeguards, ensuring that key decisions protect both the family and the business. His impartiality, combined with his dedication to the family’s long-term success, makes him a crucial figure in maintaining balance and stability.
• Creating transparency and accountability: Regular financial reporting and ongoing communication between trustees and family members foster transparency and alignment. Meetings with both Robert and family members—whether ad hoc or during more formal gatherings like family retreats—ensure that trustees remain informed about key developments in the family and the business. This consistent dialogue is essential for making well-informed decisions that reflect the family’s evolving goals. Ad-hoc meetings further ensure that the family stays engaged in strategic business decisions as needed.
• Leadership transition and remuneration: To maintain employee commitment and leadership continuity, the family implements a market-standard remuneration system, complemented by performance-based incentives. A compensation committee, comprising family council members and independent experts, manages the incentive program.
• Non-monetary incentives and employment rules: Recognizing that motivation goes beyond financial rewards, opportunities for professional development and education are included within the incentive framework. Family members are expected to earn their roles through merit, not entitlement, with recruitment and advancement policies aligned with non-family employees.
• Profit distribution and entitlements: The family develops a profit allocation model that balances reinvestment, dividends, and contributions to the Family Bank. The family council oversees any changes to this model, with the trust protector holding veto power to ensure decisions align with both family and business interests.

Through these arrangements, the Robinsons aim to foster a balanced approach that respects family interests, maintains business autonomy, and facilitates the long-term prosperity of both.

 

2. How family and investment governance work together

Beyond business assets, the Robinsons have a wide range of investments, including financial assets like the “Opportunity Pot” (formalized into the Family Bank) and individual member “nest egg” portfolios, minority stakes in startups, and real assets like property and art. Their family constitution outlines their investment principles, while the investment policy translates them into actionable plans, ensuring all assets align with their long-term goals.

 

Governance of the Family Bank

The Family Bank is a private foundation that supports family members’ ventures and projects that align with family values. Although not a traditional bank, it has clear procedures for applying for and approving financing, fostering responsibility. 

Financing may come in the form of loans, convertible instruments, or equity, offering flexibility to accommodate diverse entrepreneurial pursuits. The Family Bank also acts as the custodian of the right to use the family name in business, making sure that it aligns with the guidelines established in the family constitution and that no competing business activities undermine the family’s values or interests. It also educates younger members about investments, provides mentorship, and helps to diversify and enhance the family legacy.

John and Emma manage the Family Bank as council members, overseeing daily operations and governance. They formed an investment committee with family and non-family members, including Robert (the trust protector) and Ethan (a trusted advisor), to ensure diverse and impartial perspectives. Daniel and John also contribute their financial and investment expertise. The Family Bank requires unanimous approval from all family members on the investment committee for any equity contributions, ensuring alignment with the family’s shared vision.

The family is considering merging their “Opportunity Pot,” “Liquidity for unexpected events,” and “Direct Investments” into the Family Bank for better efficiency. John and Emma’s personal investments and commercial real estate aren’t included now, but they might choose to transfer them to the Family Bank, Nest Egg Trusts, or their heirs in the future.

The family office hires professional, long-standing advisors to manage their investments. The Family Bank is funded by profits from the family business, while the Family Wealth Navigator is used to track and adjust liquidity needs.

Younger family members can apply for financing, gaining practical experience in investment management. Ethan mentors them, guiding them through financial decision-making and fostering a culture of financial literacy and stewardship.

 

Governance of the “Nest Egg” portfolios

The Robinsons created nest egg portfolios for each of their children, originally conceived as “rainy day” funds. These funds might become “umbrellas” for John and Emma’s future descendants, allowing each child to manage their own assets “off-platform”. 

Each child has a discretionary trust, managed by a professional trustee and overseen by Nancy (another protector), with flexibility for future changes. The trusts were originally for the children’s upbringing and education, providing financial security if something happened to John and Emma or their family wealth.

The trustees, with a consent of the protector, have discretion over distributions until the children turn 25. 

Afterwards, capital distributions can be made for important life events like marriage, real estate purchases, or business ventures. When the children turn 35, they may have more direct access to the funds, though John and Emma wish to keep some money in the trusts for emergencies like health problems or financial difficulties. Income from the trusts can always be distributed.

John and Emma are considering granting their children the authority to change the trust deeds after they die. This would let the next generation adapt the provisions to fit their own families, keeping the trust’s values and goals important while also making sure the trusts stay useful as new generations take over as stewards. This flexibility could enable the children, as parents themselves, to pass on these rules and values to their own descendants, ensuring continuity across generations.

John and Emma’s letter of wishes can be changed over time, so the trust structure can adapt to the family’s changing needs. The trusts might eventually become tools for accumulating wealth for future family branches.

This would enable each branch to benefit from the protection and growth of the family wealth while also protecting the trusts’ long-term capital.

 

Other family governance considerations

Family assembly and family retreats

The Robinsons recognize the importance in keeping the family united and connected, especially as the family grows and spreads out. To maintain strong bonds, John and Emma created a family assembly where they can share the family’s history, values, and goals. 

This assembly is especially important for family members who aren’t directly involved in the business and for preparing the third generation, which might find it a greater challenge to stay together compared to John and Emma’s three children, who grew up together.

The family assembly includes all adult family members who follow the family constitution. Younger family members can also join starting at a certain age, but cannot vote. This lets younger generations learn about the family culture, understand their rights and responsibilities, and develop problem-solving skills.

The Robinsons have annual family retreats in addition to regular meetings. These retreats are for sharing personal updates, taking part in special training programs, and talking about the family business and other assets. 

After the success of their first retreat, John and Emma are committed to hosting these gatherings every year. Their main goal is to encourage open communication, transparency, and respect. Each retreat lets family members share their thoughts freely, making sure everyone has a say in the family’s ongoing narrative.

To ensure fairness and shared responsibility, the family takes turns organizing the retreats, with help from the family office. These retreats help strengthen family relationships and keep everyone involved in continuing the Robinson legacy.

 

Family disputes

John and Emma learned from past disagreements, like the one about the grandfather’s watch, and created clear rules for dealing with family conflicts. They made a comprehensive conflict resolution policy that is now part of the family constitution and must be followed by all family members.

The key elements of this policy include:

• Clear definition of conflict: The policy sets specific criteria for identifying disputes, including issues related to the family business, inheritance matters, investment management, or access to family assets. This ensures any potential conflict is recognized early and addressed within the framework.
• Conflict resolution roadmap: A structured process guides conflict resolution, starting with negotiation, followed by mediation, then arbitration. Litigation is to be used only as a last measure, avoided wherever possible.
• Involvement of third-party experts: Recognizing the importance of impartial perspectives, the policy allows for the involvement of external experts to help resolve conflicts effectively.

The family council plays a central role in facilitating communication between parties, providing counseling to resolve disputes, and engaging external mediators when necessary. Confidentiality is key, with a strong focus on avoiding court proceedings and preventing publicity.

 

Education and mentoring

Sophie proposed adding educational programs to the family governance system to prepare the younger generation for leadership, improve their financial literacy, and equip them with the skills needed to sustain the family business. John fully supports this idea and has asked the family council to create a special educational program for future leaders, making sure their progress is tracked and reported.

Emma suggested creating a broader mentoring program to support younger family members. While Ethan is already mentoring on investment-related matters, Emma emphasized the importance of guidance across both professional and personal aspects, including mental health and wellbeing. Robert, the protector of the business-owning trust and godfather to the second generation, was proposed as a mentor. 

With his extensive experience and close connection to the family, Robert is well-positioned to offer wisdom, share life lessons, and provide guidance on personal and professional development. His long-standing relationship with John and Emma makes him qualified to pass down the family’s values, traditions, and stories, helping younger members navigate challenges and opportunities.

These structured educational and mentoring initiatives are vital for stewarding family assets and responsible management across generations. They foster unity, resilience, and continuity within the family, reinforcing the principles of governance that will guide future leaders.

 

Family Office

The family office is important for the Robinsons’ governance system. It was first created to help manage the family’s growing financial assets, with a primary focus on investment management, including tasks like performance analysis, reporting, benchmarking, and overseeing investment managers. But as the family’s goals changed, so did the family office’s responsibilities.

The family office’s responsibilities expand far beyond financial management. Its focus is protecting the family’s wealth, strengthening relationships between generations, and ensuring alignment between family interests and external parties like advisors and business partners. The family office helps various governance groups by organizing family retreats and council meetings, keeping records, managing data, and overseeing tax, legal, and compliance issues. It also handles broader family projects, like educational and training programs for the next generation.

The family office is still an informal group, with the two employees working directly for John and Emma. They are considering formally incorporating the family office in the future, creating a corporate body with a defined governance structure. This would have several benefits, like enhanced accountability, faster decision-making, and clearer roles as the family’s needs change. Officially forming the family office would also create a stronger system to handle the family’s more complex assets and governance needs, while keeping things consistent across generations.

The family office acts as the “project manager” of the family’s governance framework, and is well-placed at the intersection of family, business, and investment systems. It ensures the family’s interests are represented, its values are communicated, and its governance structures are efficiently managed—across all fronts. As the Robinsons look ahead, formalizing the family office could further strengthen its ability to support the family’s long-term goals, providing a stable foundation for the evolving governance framework.

 

Launching the governance system: a new beginning

The Robinsons have successfully turned their shared goals and principles from their family constitution into a complete governance system that includes family, business, and investment parts. However, this is just the start of a dynamic new phase in their stewardship of wealth.

The family will now put their governance framework into action, actively using the roles, responsibilities, and systems they have designed. This transition will require constant adaptation as family members evolve into their new roles and group interactions. It’s a time for learning and growth, where the governance system will be tested and improved to fit the family’s changing needs.

The success of the governance system depends on the Robinsons’ commitment to open communication, education, and flexibility. The family council, family office, and other governance bodies must work together to track progress, evaluate decisions, and make changes to handle unexpected problems and take advantage of new opportunities. Mechanisms like the Family Bank, trust structures, and educational programs show their proactive approach to governance, preparing each family member to make a meaningful contribution to the shared legacy.

The Robinsons understand that governance is a living process that needs constant attention, especially as new generations grow up and circumstances change. Their structures are designed to be flexible, allowing for new ideas and adjustments as the family’s goals and the outside world change. This forward-thinking approach makes sure the family’s values and goals stay important, even in times of change.

In conclusion, the Robinsons are starting a well-planned journey of stewardship that requires determination, flexibility, and a shared commitment to their collective vision. With a solid foundation, a robust governance system, and a focus on continuous improvement, they are well-prepared to grow, stay united, and prosper as they deal with the challenges of family governance.