Tools

How PTC Boards Can Improve their Discussion of the Distribution Function

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This one-page essay describes two simple tools for improving PTC Board discussions.

A trust is an ownership vehicle; a trustee operates as the functional owner of the assets and invests those assets for the benefit of the beneficiaries. In addition, however, a trustee must fulfill the distributive function: making the assets available to the beneficiaries appropriately (under the terms of the trust documents) for their use. A private trust company (PTC) has the advantage (over an individual or traditional corporate trustee) that it is focused exclusively on the well-being of one particular family. It can therefore really come to know the needs and interests of that family and tailor not only its…

Family Enterprise

Distribution Challenges from the Perspective of a Responsible Adult Beneficiary

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This post introduces an essay on the key questions around distributions: Who decides? When? How much?

Much has been written for trustees about the distribution function: how to understand various distribution standards (e.g., health, education and maintenance); how to deal with difficult or incapacitated beneficiaries; how to balance intergenerational considerations in making distributions. This note considers the distribution function from a different perspective: that of a responsible adult beneficiary. Although this may be the most seldom theorized or discussed scenario, it is also the most common. And in this least problematic…

Tools

Using the DISC Assessment with Families

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The DISC assessment is a useful tool for helping families, trustees, and family office or business professionals understand how and why different people process and behave differently.

The DISC assessment is a simple, powerful tool for identifying how different people make sense of the world differently. I've used it for years with students, corporate teams, and family groups. This post is meant to introduce DISC, show some of what it can do, and explore a bit how a family office or other advisor might use it with a family or within a family enterprise. What is DISC? The DISC framework was originally created by Dr. William Marston, a physiological psychologist, in 1928. Although he theorized the four basic behavioral types that DISC describes, he did not create an assessment tool--others have done that based on his work. As a result, various assessment tools exist. If you Google "DISC assessment," you will find many different options. (For a useful history of the development of the DISC profile, see this timeline.) I personally use a version of DISC by…

Family Enterprise

Designing a Healthy Family Prenup System

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This post introduces an essay on creating a prenup system that preserves human, not just financial, capital.

Many multigenerational business families decide at some point to encourage family members to enter into premarital agreements. Often families are motivated by one experience with a “bad divorce” – whether that means a divorce that disrupts the family or business, removes an unexpected amount of assets from the family’s control, or causes undue suffering for children or grandchildren. Particularly as enterprising families move into their second, third, or fourth generations (and have therefore had such…

Tools

Two Tools for Exploring Partisan Perceptions in a Family Enterprise: An In-Laws Example

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Two Partisan Perceptions tools from the conflict literature can help families in a variety of situations, including understanding "in-law issues"

Lots of families in business worry about in-laws. What if a spouse has married into the family "just for the money?" What if he or she tries to "take over" or is overly opinionated? What if the in-law creates conflict? What if he or she is a "gold-digger" or spendthrift? Although less often discussed, in-laws have worries about business families as well. What is this family business or enterprise, and why does everyone seem so worried about it? Who are all these lawyers, advisors, and other professionals circling around my spouse and his or her family? Why does it seem like everyone is so secretive? Or uptight? Or obsessive about money? Where You Stand Depends on Where You Sit The conflict and negotiation literature has long focused on such examples of "partisan perceptions"--situations in which two parties have very different views on the same subject, and in which those views…