17 February 2020
John Duncan
Partner | Kozusko Harris Duncan
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Serving the best interests of exceptionally successful families
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To be successful, the mission of any private client service firm should begin (and arguably end) with the best interests of its private clients. “Private clients” will be defined by different firms in different ways, but the following is one such definition, with some special merits:


“Exceptionally successful US and international families who seek to remain successful, both financially and as cohesive, flourishing families, for generations”


One merit is how this definition focuses the private client lawyer on the culture, circumstances, and hopes of the client family, as a whole, rather than just on aspects of the client that relate to the lawyer’s chief fields of expertise. Another is distinguishing proactive, goal-driven families from more passive families less committed to shaping their own futures.


The defined private clients are successful families for whom a private client law firm can be the most helpful because the clients’ dynastic goals are the most challenging for them and their advisors. Creating plans, strategies and structures and helping clients manage legal risks addressing only current and foreseeable future contingencies seems like challenge enough. But legal counsel to private clients must advise their clients on optimizing their odds of being successful not just for a few years or a mere single generation but for generations.


The dynastic aspirations of these families require legal advice and work product that respond to today’s known and foreseeable contingencies as well as “known unknowns” and “unknown unknowns”. The last two require plans and structures stable enough not to be impulsively derailed by a key family member upset by his siblings or children and yet flexible enough to evolve in response to current unknowns when they become known, perhaps only far in the future. The obvious example applicable to all families is the currently unanticipatable circumstances, values and hopes of complete strangers: generations of family members as yet unborn.


The Private Client Family’s Mission


To be and remain “exceptionally successful” means at a minimum staying together, as a family, and remaining wealthy for two, three or more generations. This is made clear when the first thing a family wants you to know is that they are a “2nd [or more] generation family.” Beyond meeting this rough yardstick, these families reference qualitative goals that we can reformulate into just three broad sets of aspirations:


1. Working together and engaging with each other in ways they find meaningful and worthwhile

2. Using family wealth to help, and at least not harm, each current and future family member in leading a satisfying and productive life

3. Pursuing the individual and collective social and charitable objectives of family members in their local, national and world communities and communities of “affinity”


Positively Influencing Behaviors


Law firms assist all their clients in overcoming legal impediments and taking advantage of opportunities with legal implications. This often boils down to managing legal risks, developing strategic and estate plans and creating legal structures to limit other risks or otherwise promote desired outcomes. All of these have as their primary purpose the influencing of human behaviors, including those of future generations. This should not be alarming when one appreciates that every agreement, estate plan and trust, and every corporate and limited liability structure—in fact, all the primary tools of the lawyer’s trade—are intended to control, incentivize or otherwise influence human behavior. Each of the three sets of private client goals above envisage plans and strategies doing the same.


The question then is how best to influence behavior in service of a family’s dynastic mission. One sadly common option remains that of satisfying the need of patriarchs or matriarchs to exact obedience from descendants to their generation’s dreams, in lieu of the descendants’ own dreams, as the elders’price for access to the family’s financial legacy and family governance. This negative and much-maligned version of “control from beyond the grave” can also be self-defeating. In this day and age, “command and control” estate plans frequently lead to beneficiary rebellions and either family disunity or, at best, trust reformations never contemplated by settlors. Responsible counsel will advise their clients of these risks to their family mission and hope their estate planning clients are emotionally able to process effectively that information.


Fortunately,most private client families genuinely intend to provide help and encouragement, rather than fetters, from beyond the grave. But they may need assistance to understand the difference. An important responsibility of private client counsel then is to develop a sense of and advise their clients regarding plans and plan implementations that support a family’s ability to achieve its hopes as opposed to types of restraints that may guarantee beneficiary resentment and family conflict and even disbandment.


Client Self-Knowledge as Foundation for Bespoke Plans and Structures

Something more than downside protection is needed to fill that glass beyond half way.Unless a family is confident of its goals and knowledgeable about and comfortable with the “money, sweat and tears” required to achieve them, counsel and other advisors cannot create truly bespoke structures or devise plans and strategies that truly fit the family and maximize the odds for multi-generational cohesion and financial and personal success.


The foundation for successful family planning, robust family enterprise structures and family-appropriate governance is the family’s self-knowledge and its understanding of the real costs— financial and personal. Unfortunately, in most cases the family has not on its own gone beyond broad statements of hopes such as appear above and may not understand how hard achieving their multi-generational goals will be.


For this reason private client counsel must support their legal expertise and client insight with the skill–and the will–both to guide the family through a self-discovery process by which the family and its advisors can learn family members’ true aspirations and advise them of the level of financial and personal commitment required to realize them.


Even when a private client firm makes the best interests of its clients its mission and fashions a business plan embracing all of the suggestions provided here, there still can be no guarantee that their family clients will flourish for generations. But by doing these things, they will significantly increase the odds that their private client families will flourish as long as they have the resolve, resources and resilience to do so.



·  Complexity of (i) individual and entity tax, legal and compliance obligations, (ii) family activity structures both ad hoc and formal (e.g., family office and private trust company) and (iii) financial and estate plans

·  Addressing multi-dimensional problems with silo solutions

·  Income and transfer taxes and tax controversies

·  International taxation, reporting and regulation for multi-national families (or failure to realize they are such families)

·  Family office regulation, including securities, privacy, money laundering and other applicable financial services laws

·  Litigation and other intra-family disputes

·  Significant transactions involving strategicinvestments, family businesses or family financial institutions

·  A lack of flexibility built into multi-generational planning vehicles

·  Making it too easy or too hard for family members to exit the family structure




·  Family dissension and conflict

·  Failure of family to identify its aspirations in detail

·  Lack of commitment of the family to their espoused goals

·  Lack of formal risk identification, prioritization and management

·  Overspending

·  Lack of family coordination, cooperation and consensus

·  Business, trustee, family leadership and wealth succession

·  Succession planning for family entities such as LLCs, FOs and FLPs

·  Governmental risk, especially constant,unpredictable changes in the rules

·  Divorce and death disrupting intended plan

·  A known unknown: Circumstances, values and aspirations of generations unborn

·  Unknown unknowns: Insufficient flexibility torespond to when they become known

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