The Crucial Role of Family Governance in the Success and Effectiveness of a Family Trust

February 20, 2024


In the complex framework of estate planning, the creation of a Trust emerges as a very beneficial strategy. However, family governance plays a crucial role in the success and effectiveness of this instrument. In this article we will list the key elements that form strong family governance in the context of a Trust, providing valuable insights for those seeking to ensure a successful and efficient wealth transition.

Some of these elements are:

  1. Transparent Communication: Establishing open and honest channels of communication within the family is essential. All members must clearly understand the objectives of the trust, assigned responsibilities and any changes to the estate structure.

  2. Decision Making Structures: Clearly define how decisions related to the trust will be made. This could include the creation of a family council or the appointment of a trustee with specific authority.

  3. Financial Education: Promote financial education among family members so they understand the principles behind the trust, the risks and benefits, and how to contribute in an informed way to financial decisions.

  4. Generational Planning: Consider the needs and goals of multiple generations. Successful family governance takes into account long-term vision and strategies to ensure continuity and adaptability over time.

  5. Succession Protocols: Establish clear protocols for succession, whether in the management of the trust or the distribution of assets among heirs. This can help prevent conflicts and ensure a successful transition.

  6. Family Ethics: Define and promote a shared set of ethical values to guide trust-related decisions. This can help maintain family cohesion and the integrity of the estate.

  7. Periodic Review: Establish a regular process for reviewing and evaluating the effectiveness of family governance. This allows adjustments to be made as necessary, to adapt to changes in the family, financial situation or legislation.

These elements form a solid framework for family governance in the context of a trust, allowing for efficient and sustainable management of the estate over time.

It is necessary to highlight that, when defining the terms of the FAMILY TRUST, the collaboration with legal and tax advisors specialized in estate planning and family governance contributes significantly to its effectiveness over time. These experts become strategic allies for the family, helping them navigate the complexities of wealth management and ensuring the durability of their values and objectives across generations.

By Florencia Ribes.