As I have discussed in previous columns, including my last on creating a family story, heritage planning seeks to fill in the gap in a family's traditional financial and estate planning. One of the key components of heritage planning is the creation of a Heritage Statement, which is a unique declaration of love and lasting value shared by one generation of a family with another.
A Heritage Statement is a critical document in a family's history. The Heritage Statement shares a client's story, explains a client's values and articulates clients' deepest hopes and dreams for the future of their famiies. It also typically serves the critical function of introducing the concept of family governance, while also shepherding in a new paradigm of interaction for the family internally. In addition, the Heritage Statement will help to create clarity for the client's team of professional advisors.
A Heritage Statement is also an invitation: it invites every member of the family to participate in the building of a unified, lasting structure. This is no small task. Studies have demonstrated the fact that building and enhancing trust and facilitating effective communication within the family are foundational keys to family success.
Instilling these elements in a group can be challenging. Effective communication within the family must be adult-to-adult. The keys to achieving this have come to be known as the "3 Ps," as explained by Buchholz and Roth in their book, Creating the High-Performance Team. The 3 Ps are:
- Permission. All individual family members need to be given permission to assert themselves and take the first step.
- Protection. All family members also need to feel safe in asserting themselves.
- Potency. All family members also need to feel that what they contribute will make a difference.
Find a family that has remained unified and strong for generations, and you will find a family with a clearly defined shared vision. A united family is created by establishing common bonds of family history and family experience. In the heritage planning process, great significance is given to the development of the vision and to the way it is expressed and shared with the family.
The Heritage Statement communicates the values, stories, history, life lessons, experiences, hopes and dreams of the generation that creates it. The vision promoted in the document is often revisited by future generations as a reference point for both financial and non-financial decisions, and the family's Heritage Statement is updated to include additions to the family story and life lessons.
The natural vehicle for the expression and exploration of this vision and the values that have informed it is a formalized family structure that enables a passing of the torch from one generation to another. To many the term "family governance" sounds formal, complex and even inconsistent with what a family is supposed to be. However, family governance at its most basic level is merely the process by which a family makes decisions as a group.
