- The family represented by the individual members of the family of affinity
- The family’s human capital
- The family’s intellectual capital
- The family’s financial capital
- The family’s social capital
Long-term Family Risks
The Proverb, “Shirt sleeves to shirt sleeves in three generations”
- Failure of family governance
- Failure to understand that success requires a 100-year plan
- Failure to comprehend and manage all forms of family capital ….human …intellectual …financial
Intermediate Internal Family Risks
- Malthus’ Law-the geometric increase of family members in each generation
- Poor beneficiary/trustee relations
- Investment programs of fewer than 50 years
Intermediate External Family Risks
- Inadequate trustee management
- Estate and other forms of transfer and wealth taxes
- Acts of God
- Changes of political system
- Lack of personal security
Short-term Family Risks
- Income taxes
- Market fluctuation
- No mission statement
- Lack of financial education
- Are individual family members successfully pursuing happiness?
- Are the family’s human and intellectual capital increasing as measured against the family’s liabilities?
- Is the family as a whole dynamically preserving itself?
- Is the family’s governance system producing more good decisions than bad taking a 7th generational view?
*Special thanks to Charlotte Beyer and The Institute for Private Investors for their invaluable assistance in the creation of this work
Copyright © 1999 by James E. Hughes, Jr.