Location, location, location: context, context, context

More and more we invite family members to join hands with us when drafting family constitutions. The preface, dealing with the history of the family and the enterprise, will most of the times be written by those family members in particular who up until then might have experienced a distance between them and the enterprise. This preface also deals with why the family members think a family constitution is such a good idea, written down in accessible wording or even quotes.

The same applies to the detailed clauses of such a long document, written down in, for most, rather unusual language. Examples given by family members, written down in their own words and illustrated by drawings in their own hand, all come in very, very handy indeed.

The added value of this? In doing so, everyone will have a visible contribution to the final document, not only the ‘usual suspects’. In jointly expressing the ‘why’, the ‘how’ becomes more easily a joint effort too. The constitution itself will not only become more robust and less vulnerable to pressure from the outside, e.g. enquiries from in-laws (‘What on earth did you sign that for?’). Also pressure from within the family is less likely to cause damage if in clear, day-to-day language one has agreed to why to have this family constitution and what its purpose is to be. Thus, it’ll be less likely to be confronted by family members who later on appear not to have understood what was going on (‘But that’s not what I understood’).

An appealing way of having everyone join into the process of writing such a family constitution is the use of family sayings. ‘I remember our dad always saying ..’ or ‘Grandmother, in such a situation, always said ..’. Very often these sayings only exist with a particular family and require clarification to outsiders. However typical they might be, they can be used as ideal headings for and/or illustrations of those specific elements of a legal document that provide a legal extrapolation of such a saying.

Even documents that might not require signature of every family member, such as last wills, donations, prenups, can benefit from this approach. We’ll ask family members more and more to give us their views on why this document came into being and why it’s worded as it is and not otherwise. These views then become a crucial element of the final document. All this makes it easier for those not expressing themselves in legal language on a daily basis, to appropriate the content of such a document, despite the ‘legalise’ the author dipped his or her pen in. It also functions as a test to see if indeed one’s expectation, perception and wording do match.

This contextualization of legal documents not only reflects on the content, it also applies to the actual setting of them. A deed of donation might only need to be signed by the donor and the beneficiary in order to close the transaction. The donation might however have a completely different impact on the relations within this family if all other family members would be present and confirm their presence by countersigning the document which would also explain unmistakably that this gift has a particular motivation and purpose other than simply ‘giving away without the others knowing’. Legally the presence and countersigning might have little effect, however one could discuss on whether in applying this method, the legal effect of it in the end might turn out to be less easily challenged.

So, in Family Enterprise Consulting it’s context, context, context that will very much determine the robustness of all agreements. Do join us in writing your family charter.

(We also look forward to hearing ‘your’ family sayings!)

Blog author

Rudolf Janssen 

Director, Tax

Rudolf specialises in business succession, both in Deloitte Netherlands and at Nijmegen University. He publishes regularly on issues relating to business succession and he is a co-editor of several magazines and publications relating to this subject. Tax incentives for business succession can be instrumental in getting the subject of succession put on the agenda of the family. Other aspects of succession however will need to be determined by the outcome of the discussions within the family of the issues at stake. The Deloitte member firms provide bespoke services on durable family enterprise governance in the interest of all stakeholders of such an enterprise.