As an in-law coming into a family business, you’re stepping into one of the hardest working environments imaginable. A family member is held to a higher standard than regular employees, but an in-law has to work even harder than a family member.

“It really takes someone with vision and purpose because there will be a lot of extra challenges,” says Ricci M. Victorio, CSP, CPCC, managing partner at the Mosaic Family Business Center.

If you lay the right groundwork, establish clear expectations, and work with an adviser familiar with the challenges that will occur, she says it can be a productive and joyous experience.

Smart Business spoke with Victorio about how in-laws can successfully enter the family business and thrive.

What challenges do in-laws face when coming into the family business?

The hardest thing to overcome is perception. It doesn’t matter if you have an MBA from Cambridge or a Ph.D. from Harvard. When it comes to in-laws, the fact that you married into the business downgrades any credentials in the eyes of non-family managers or employees. People will tend to judge you harshly, so be patient and don’t take it personally.

How can an in-law successfully enter into the business?

The position, pay scale and responsibility must match the in-law’s experience and education. Thrusting an unqualified in-law upon people, no matter how great he or she is, makes it a much harder road. For example, an in-law was a sales manager making six-figures who was downsized. Now, he’s in trouble financially, and the family is worried. The family can bring the in-law into the business, which might be in another industry, but he shouldn’t start as the head of the sales division. He needs to learn the business and earn his way up the corporate ladder. If parents are still concerned about the financial gap, they can consider gifting additional monies from outside of the business — to help until he earns his way up.

It can be helpful to have the in-law candidate interview with the executive management team to gain support.

How can in-laws overcome the assumption that they have the boss’s ear?

You can’t expect the employees to be your friends, because they are going to assume that anything they reveal will get back to the boss. It can feel isolating and you have to be above reproach. Stay professional and never assume to be the heir apparent.

Also, if you have a problem, resolve things through the proper chain of command. If you’re not reporting to your father-in-law, don’t go to him when you have an issue.

Remember when you come home and complain to your spouse about work that you’re talking about a family member. Your spouse may get defensive, run to whomever you’re complaining about or start disliking that person. Try to share more than just the bad days.

What documentation is needed to protect the business, and the in-law?

Families with a high net worth business typically will require a prenuptial agreement that protects the stock from leaving the family in the case of divorce or death of the blood relative. However, there are incentives such as restricted or phantom stock for high-performing managers, which can provide financial incentives that feel like ownership for growing the company.

It’s also critical to create family member employment and stock qualification policies. These policies define the benchmarks and requirements for all family members, whether an in-law or not, as to how they can become stockowners or hold key executive positions, clarifying the pathway and making family employees more accountable.

Why is having a succession coach valuable?

Engaging a coach who specializes in succession transitions to help employed family members can smooth the predictable challenges along the way. Family employees, including in-laws, need a safe place to talk, and guidance to strategize through the maze of issues that will occur. The coach also can facilitate a family business council, which provides a venue for family members to talk about business related topics, questions and issues that would normally feel inappropriate to bring up in a productive environment.

Ricci M. Victorio, CSP, CPCC, is a managing partner at the Mosaic Family Business Center. Reach her at (415) 788-1952 or

Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.

Published in Northern California
Friday, 30 November 2012 19:40

Roger Slade: Saving the holidays

Imagine that you are sitting at the holiday dinner table with your family — aunts, uncles, cousins and distant relatives from out of town. Someone at the table cavalierly brings up the November election. Next thing you know, World War III breaks out, as your family members debate the merits of the candidates and the future of the country over turkey and mashed potatoes.

Now, imagine that these same people are shareholders and employees in your family business. If these people cannot agree between the two politicians, how will they be able to agree about the joint management of their financial affairs? The answer is only with great difficulty. This is one reason why so many family businesses, and so many families, end up in costly litigation.

Here are some observations from someone who has litigated many intra-family disputes, about what might have been done to avoid a nasty and expensive lawsuit.

Sign a contract

It may seem elementary, but the fundamental concept of a contract is often ignored by people in business. Should you really sign a contract with your brother about the maintenance of a family business? After all, isn’t this the person that you grew up with, shared a room with … your best friend? Of course, you should.

The interesting thing about the negotiation of shareholders’ agreements among family members is how absolutely divergent the views are of different family members about how to run the business and make it profitable. These views often manifest themselves in the negotiation process.

Imagine, however, that there was no negotiation process, and instead, the business began without a written agreement. The likelihood is that chaos would ensue, profits would dissipate through disagreements and nothing of a material nature would be accomplished. Thus, this basic point — the execution of a contract — is a fundamental and necessary component to founding a family business.

Establish a hierarchy

Someone has to be the boss. Historically, it has been Dad. However, in “modern families,” other people can be asked to assume the mantle of leadership. Generally, it is wise to choose the person with the most business experience, the best education, and the most obvious leadership skills.

In any family, the appropriate candidate should be obvious. If the parties cannot agree on this, it is generally a bad sign. Leadership is essential to any business; and a family business is no different.

Treat it as a business

The family business is a real business. The family business should not be run like a family. The conversation between the leaders in the family business should not mimic the conversation at the Thanksgiving dinner table. Rather, family businesses should conduct regular meetings, where notes are taken, minutes kept and tasks assigned. It is a good idea to retain an outside lawyer to help administer the affairs of the business.

You should also be able to judge the potential success of your family business by determining how easy it is to apportion tasks among family members after the Thanksgiving dinner is concluded — who will wash the dishes, the pots, clean the tables, fold the linens, and take out the garbage?

If the parties cannot agree, following dinner, how to clean up, how will they be able to run a business?

Establish an advisory board

Working with a family member during the day and then having Thanksgiving dinner with that family member the following weekend presents some challenges. Issues regarding the family business are more likely to arise at inappropriate times — during holidays, on weekends or after work hours.

If Dad or Mom is in charge of the business, this is even more likely to occur. One suggestion for taking Dad or Mom “out of the loop” would be to establish an advisory board. These are individuals you’ve retained for the purpose of dealing with sticky business issues that place Dad or Mom in an awkward position.

Let the “advisory board” take the heat for a difficult issue. That way, you can explain that the controversial decision — which may negatively impact a family member — was made by the advisory board and out of your hands.

Roger Slade is a partner in the law firm of  Boyd & Jenerette, P.A. and chairman of the firm’s Commercial Litigation Department. Reach him at

Published in Florida

Family businesses typically enjoy employee loyalty and deep-seated pride because the family and the business are one and the same. However, with those advantages come certain risks.

“I tell people often, family business is the best and the worst form of business,” says Jonathan Theders, president of Clark-Theders Insurance Agency Inc. “You’ll do anything for family. It’s always amazing to me how family businesses aren’t run like typical businesses.”

Theders says 90 percent of the businesses in the U.S. are family businesses — a massive segment of the economy.

Smart Business spoke with Theders about the unique risks these businesses face and how to mitigate them.

What unique risks do family businesses have to consider?

One is an informal or complete lack of company policies or business plans. You should document your responsibilities and expectations for each family member in a family charter, but it is rarely done. It might be called an employee handbook in a typical business. If someone doesn’t perform in a regular business, you remove him or her, but it’s hard to do that with a family member.

At the end of the day in a typical business, the employees go home. But you can’t always separate the family business from the family. On holidays or birthdays, it is still business. You also know more of what’s going on in their personal lives than you would know with regular employees, which can pose challenges.

The majority of a family’s assets are tied up in the family business. Everything links to it, and it’s the source of all good and frustration. Divorce, illness and financial hardship normally create productivity issues for employees, but in a family business, it’s more complicated. You have to consider who owns shares of the company and the valuation of those shares. Maybe the business was worth $100,000 when the founder got married, but now it is worth $1 million and a soon-to-be ex-spouse is entitled to half of it. Where is that half million coming from? It’s probably coming from the sale of the business because the founder doesn’t have half a million in cash to pay off the divorced spouse.

If you have HR policies and procedures for general staff for sick days, absenteeism, behavior and dress and a family member is not adhering to those same standards, it also creates problems.

How do you handle special treatment concerns?

You have to be extremely cognizant of how you treat and compensate family and non-family employees. Make sure you are consistently selecting the most qualified individuals to fill roles in the company. This is a huge problem, because most of the time companies fill holes with family members that are not performing as well and other employees subsidize that. Take the family aspect out of it, and it could be easier to have the right people on the right seat on the bus.

How can you mitigate the risk of unhappy employees who are also family members?

If a normal business’s goals don’t match up with an employee’s personal goals, that employee can find a new job. It’s not as easy in a family business. It’s difficult to tell a parent you’re leaving or tell a child, ‘You’re not right for the business.’

That added family dynamic makes failure much more intense, and why it’s important to devise a plan that balances the family goals and business goals. For example, one family business had 70 employees; 36 were family members. The matriarch mom believed everybody with the same last name should be compensated equally whether they were pushing a broom or the president of company. That causes major problems when you have such differences in roles and responsibilities and abilities. Everybody wants mom’s wish to be true, but it doesn’t make good business sense.

How can you stop family conflicts from bleeding over into the business?

The adage ‘Leave your personal problems at the door’ doesn’t apply in a family business. It’s too difficult to separate family and business conflicts.

There’s a lot of sibling, and even cousin, rivalry. You grew up fighting for the last piece of chicken or the last point on the basketball court, and it continues on when you come into the business.

It’s unrealistic to believe that all family conflict can be removed from business, but you have to work harder at establishing those boundaries. Understand the potential family conflicts that can come up and try to address them ahead of time.

Family decisions are often extremely emotional and irrational. One recommendation is family council meetings that encourage members to get together and talk about where the business is, estate planning and other long-term issues. A third-party moderator often needs to be involved because it is so emotional. Another way is involve your board of directors or advisers, which brings an objective view to company performance and future strategy.

How are the transition risks different in family businesses?

The failure rate of businesses moving to the second generation is very high. Statistics show that 85 percent of family businesses don’t make it to the third generation. That’s often because the first generation has trouble letting go or hasn’t prepared the second generation to take it to the next level.

Often, family business owners do not have succession plans or an exit strategy. At 70 or 80 years old their entire personality, their every breath is related to the company; they’ve put 40 to 50 years in, through hard times and good times. They don’t know how to get out, but they are not the ones to lead it into the future.

Jonathan Theders is president of Clark-Theders Insurance Agency Inc. Reach him at (513) 779-2800 or

Insights Business Insurance is brought to you by Clark-Theders Insurance Agency Inc.

Published in Cincinnati

As a family business owner, you may want to bring your children or other family members into your business. You may have already done so and discovered it’s been a bumpy ride. How do you do work with family members and still protect family relationships?

According to Ricci M. Victorio, CSP®, managing partner at Mosaic Family Business Center, this can be a difficult thing to do.

“When family members work together, the boundary between work and family time becomes blurred, and the relationships overlap,” says Victorio. “Families need to think through how to separate the parent/child relationship from the owner/employee relationship.”

Smart Business spoke with Victorio about how to preserve family relationships and set boundaries while working together as a family.

Why is it important to separate family relationships from business relationships?

It’s pretty clear that you can’t run a business like a family, and you certainly can’t run a family like a business. So when family members work for you, it can get very complicated. Family relationships are based upon unconditional love and acceptance. Business is all about performance and accountability. So how do you hold your family members accountable to performance without getting it confused with love? How do you demote or fire a family member without destroying your family? It is naïve to think that your company’s employee handbook will be sufficient for these complicated issues.

How do you untangle those relationships?

An experienced succession adviser can help you create a family member employment policy to define the qualifications for entering the business, such as education and job experience. This should include the minimum requirement of two to three years working somewhere else before beginning their career in the family business. Working in an environment where your successors are employees and a manager can hold them completely accountable for doing stupid things or be acknowledged for doing a great job is extremely important before coming under the scrutiny of your management team.

In a family business, negative behaviors of developing successors might be overlooked, tolerated or excused, but in the outside world, where their last name isn’t on the wall, these behaviors create real consequences that provide opportunities for learning.

Secondly, the adviser can help you design your expectations of what it is to be a family member employed in the business. Make it clear that because they are family members, they are going to be held to a higher standard:

  • We expect you to be here early, to stay late and be the example.

  • Keep a positive attitude and opinions about family members or management to yourself.

  • Be gracious and respectful. You can learn from everyone.

  • Be willing to do any job that’s asked of you.

How do you set expectations for managers of family members?

Bring your key managers in as mentors to define how you want to handle your children’s professional development, as well as the predictable bumps and challenges.

Triangulation can be a really big problem in family businesses. For example: The manager is asked to train and manage Dad’s son, Sam. But Sam is acting up, coming in late and overall not doing a very good job. The manager chastises Sam and gives him specific instructions for modifying his performance.

Instead of taking the correction as an opportunity for growth, Sam complains to Mom who then goes to Dad saying Sam is being treated unfairly. This forces Dad to ask the manager why he’s being unfair to Sam, putting them both in an awkward situation. Does the manager please the boss and spoil the child, or does he try to be a good manager and make sure the job is done right, standing up to the boss and saying his son is not doing a good job?

The best thing you can do is talk about triangulation before it happens. Sit down with your managers and define how you want to interact with them. If a situation arises, who decides the course of action? You need to build a bridge of communication so the owner, parent, manager and incoming family member have the opportunity to talk these things through before relationships get tangled up.

If a family business hasn’t planned up front, is it too late to make changes if the child is already working at the company?

It’s never too late. A succession adviser can help you begin to untangle the knots that have people tied up. Next-generation family members can exhibit entitled, blasé or even toxic behavior at any age.

Don’t think you can turn a blind eye to it if you want to have a smooth and successful leadership transition. The situation can be turned around if you address it with determination and commitment.

Tough love may be required. For children to succeed, parents need to hold them accountable, set boundaries and communicate their expectations or ground rules for participating in the family enterprise. Included in these ground rules, there must be accompanying consequences for noncompliance. After all, employment should be considered an opportunity, not a birthright.

You love your child unconditionally and will love him or her forever, but this does not always qualify a family member as a good fit for your business. Your job as a parent may be to help that child find a career in which he or she can succeed, even outside of your business.

Many business owners feel it’s not worth all the ‘trouble’ to bring their children into the business. However, if done right, it can be extremely rewarding to to see your children growing and thriving in a business that you’ve created, contributing to the company, being respected by others and perpetuating your legacy into the next generation.

Ricci M. Victorio, CSP®, is managing partner at Mosaic Family Business Center. Reach her at (415) 788-1952.

Insights Wealth Management & Family Business Consulting is brought to you by Mosaic Financial Partners

Published in Northern California

Victoria Schneider Temple knows quite a bit about adapting. The chairman and CEO of family-owned The Schneider Corp., was reading her grandmother’s minutes — and noticed how the engineering solutions company adapted to scrape through some economic downturns.

“Back in the early days, they sold fishing maps and chopped wood to keep the doors open,” she says. “Now we find other ways — technology and such — to adapt. Everything is changing so rapidly. … It basically all comes down to your ability to adapt and your willingness to accept change.”

Temple is proud to note that accepting change as a way to foster longevity is a strong point of the 50-year-old company that tallied $14.7 million in revenue last year.

Smart Business talked with Temple about how an ability to adapt is critical to company longevity.

Q. How can your outlook help a company get through financial challenges?

A. Even though we've had a contraction in our business, I have never seen it as negative. It's an opportunity for you to go back and ask questions about how you can do things better. I do think there are going to be companies that are not going to survive the trying economic times, there are some that will and then there are going to be companies that will survive, but they are going to have no clue why; they won't have adapted like they should have when the economy turned around.

Q. So the unfortunate ones may have not asked the right questions of themselves?

A. I think you have to be able to be honest with what works and what doesn't work. If you are a leader, you need to have periods of introspection about what works and what doesn't work personally and professionally. A leadership staff has to spend time introspecting and having hard conversations about what's working and what's not. I also think you have to have the courage to understand that if you have made a wrong decision, or you've made a bad choice, you just turn around and make a different choice. You can’t be afraid to make mistakes.

Q. How do you decide what does work and what doesn’t work?

A. You have to look at the finances of it. When you are putting any type of business together, whether you are investing in new technology or investing in a new person, you have to look at what you are trying to get out of that. You need to put together a business plan, you need to have milestones, you need to know if you are hitting those milestones.  If you are not hitting those milestones, you need to know why and you need to make decisions — is this worth the risk of going forward if you are not meeting your milestones? Or is it just something that you just have to decide, ‘Hey — I made a mistake, and we need to go in a different direction.’

I think a lot of it is really just about putting a plan together and sticking to the plan, and if you aren't going to stick to the plan, you have to have very clear reasons why you're not. A lot of that is just holding your leadership accountable.

Q. What goes into determining milestones?

A: In a challenging environment like this, you need to look at things quarterly. So if you are going to invest in something, like a specific piece of equipment or if you make a new hire to sell a new service, at what stage is your break-even point? At what point is it acceptable? And how fast can you become profitable in a specific area?

So when you keep longevity in the back of your mind, you know that there are hard decisions that have to be made along the way. What makes it worthwhile is knowing that the longevity of the company and the survival of the company for employees is the most important thing.

How to reach: The Schneider Corp., (317) 826-7100 or

Published in Indianapolis

The recession caused businesses of all sizes to take stock of their organizations and find ways to run leaner, work smarter and maintain profits.

For many family businesses, this has meant asking whether their businesses could continue to support their lifestyle. Change isn’t easy, but those who took serious measures to improve efficiencies are now positioned to leave a successful legacy to the next owners, whether by succession or sale.

“By changing the way their businesses govern operations, many family owners have become more nimble and re-energized because they understand smarter ways to work,” says Tony Caleca, member in charge, audit services, Brown Smith Wallace LLC.

And that’s essential because businesses must embrace change and remain flexible to continue to compete in a global economy.

“The international flavor of business today is having a growing impact on all organizations,” says Bill Willbrand, member in charge, industry services, Brown Smith Wallace.

Smart Business spoke with Caleca and Willbrand about how successful family businesses are managing in an age of uncertainty.

Coming out of the recession, how can businesses regain the value they lost in the last few years?

The good news is that much of the money lost was value-based; its value depended on the desire of the marketplace to acquire businesses and on the ability of businesses to drive profits for buyers. As a response to the recession, businesses made their organizations leaner, resulting in a much lower overhead burden than they previously had. The result: a greater ability to generate cash flow and profitability.

The recession forced businesses to operate differently, to take a hard look at every component of their organizations and determine how each working part drives value to the overall business. It’s been a time of self assessment and retooling, and those coming out of the recession with a stronger organizational structure are poised to attack the market, both locally and globally.

Will banks finance expansion in this rebound era?

Banks are absolutely financing expansion for businesses today, but there is a caveat: Financial institutions are lending growth capital to businesses that are truly qualified. Those that are qualified are the ones that have worked closely with their banks through the good times and bad. These businesses have improved efficiencies in their organizations and done what’s necessary to improve cash flow and profitability.

Businesses positioned to get financing have close relationships with their bankers.  They’ve enabled the bank to understand how their debt will be repaid and to fully understand how those loaned funds will be utilized to improve the long-term financial position of the business.

Banks are still willing and able to lend when they are confident in the business borrower. Banks typically gain this confidence by reviewing the history of how a business dealt with the recession and what strategies it used to reduce costs and expand products and services.

Preparation is critical for presenting appropriate materials to the bank and telling your story. Businesses should approach any financial discussion with the bank as if they were meeting with their largest potential customer. Flat out, businesses seeking financing must be that prepared.

What is the upside to the current situation?

Businesses that survived the recession are running more efficiently. They have reduced waste and addressed issues that may have been lingering for some time. The recession jumpstarted change at many organizations, and although it may have been uncomfortable, there’s nothing bad about that. They’ve survived.

For the next generation to lead the business, or, in the event of a sale, the next owners, this means many of the tough decisions have already been made. Businesses are positioned for success; they’re prepared to grow. The fat is off; the challenge for the next owners will be keeping it off.

When is the right time to start transitioning to the next generation, or to prepare a business for sale?

The transition process should always be ongoing, but a formal process should be initiated at least five years prior to an exit. It is critical to identify who will drive the business going forward. Who is the ‘A’ team? The future management team must be prepared for the exit. You don’t want to walk in one day to find you’ve got a new job; the owner is checking out.

Five years — or more — gives an owner the opportunity to determine what skills are needed in management. Where are the holes, and how can those be filled with talent? Time allows the family to work through the nonfinancial issues that are inherent in a family business, primarily, what’s next after the business is transitioned? During the transition period, family members and key advisers should be involved in planning the future as a team effort.

For example, a business might appoint a transition team consisting of key advisers, an outside board of directors, attorneys, bankers and accountants. The earlier that goals, strategies and ground rules are developed, the smoother the transition will be.


What key attributes will define success for the next-generation business?

It’s critical today to focus on creating a sales culture. As we move out of this recessionary period, many businesses are identifying a need to develop qualified salespeople who can expand the business as quickly as prudently possible.

Many organizations are running lean effectively in terms of cost structure, but they still must increase their market share. To do that, they need talented, dedicated sales professionals to drive business. Adopting a sales culture while remaining nimble will position a business to succeed far into the future.

Tony Caleca is member in charge, audit services, Brown Smith Wallace LLC. Reach him at  or (314) 983-1267.

Bill Willbrand is member in charge, industry services, Brown Smith Wallace LLC. Reach him at or (636) 754-0200.

Insights Accounting is brought to you by Brown Smith Wallace LLC

Published in St. Louis

Bringing children into a family business, if not done correctly, can cause undue stress upon the family and negatively impact the business.

“Parents may wonder if their child will have what it takes to be their successor, worry about creating a sense of entitlement or be concerned that company managers may resent having to train a family member who might take their job in the future,” says Ricci M. Victorio, CSP, managing partner at Mosaic Family Business Center.

“Any time you mix family and business, you are going to be challenged,” Victorio says. “Family is all about unconditional love and acceptance. Business is all about results and productivity. The challenge is to define your expectations for your children at work so you can protect your relationships at home.”

Smart Business spoke with Victorio about how to successfully bring your children into your business without risking family harmony or business success.

When should a child ideally enter the family business?

We usually recommend family members work outside the business at least two to five years in an industry-related field, other than for part-time or summer jobs. If he or she has gained experience and had success on his or her own elsewhere, making the transition from scholastic to professional life will help avoid the stigma of also being the ‘boss’s kid.’ Doing so will give children a chance to prove themselves professionally and allow them to contribute new insights to the company, and they will have earned the right to be there with the other employees.

What are the first steps for bringing a child into a family business?

A succession professional with experience facilitating and integrating family members into family-owned companies can help structure this process. The consulting adviser will want to first interview the parents to get a clear understanding of their respective objectives and perceived obstacles. Next, one-on-one interviews with family members and key managers should be conducted to discuss their goals, expectations, education and work-related experiences. Even high school students can benefit in knowing what they need to do to be prepared, what skill sets and education they need and what requirements they will be expected to fulfill if they want to be considered qualified for a future leadership role in the family business.

The management team will provide perspective on the family goals of bringing young members into the company, the current strengths and opportunities within the team and how the family currently interacts in the business, and provide insight for developing interested and qualified family members.

As part of the interview process, we have found that profiling personality styles is very useful to gain an understanding of the potential strengths and challenges within the family and business team dynamic.

How important is it to find the right position for a child entering the family’s business?

Whether it is your child or someone you hired off the street, you want to do everything you can to ensure a good fit between the new employee’s personality and skills and the demands and characteristics of the job. Parents typically make one of two mistakes. First, they think their child should be just like them and can’t understand why they’re not, creating frustration on both sides. Or, they sometimes demand too much of their children, all too often causing them to quit, fail or give up.

Failing to match individuals with the right entry position and not providing a helpful training program to give them the skills they need usually undermines success and will strain family and business relationships.

How do you get the buy-in of managers?

Your management team is the leadership bridge to the next generation. Let them know they are critical to building the success of the business, with or without you. Match the right manager to mentor each family member to provide optimum opportunities to have positive experiences together. And never manage your own child if there is any way to avoid it.

How can families balance working together without damaging family relationships?

Draw up an agreement of expectations detailing how you want everyone to work together. Create mentor teams with executive managers and a development plan for how each family member is going to progress and learn the business. Unmet expectations will poison a golden opportunity, so it is vital to communicate what is expected of all involved. Having an experienced facilitator to help with this is essential.

Why do we need an outside adviser to facilitate?

Your succession adviser can raise issues you can’t and help you to have the honest discussions that very few families have the skills and experience to do on their own. A good facilitator will be able to get everyone together to communicate their expectations and help untangle the issues that inevitably tie families up into knots. An outside adviser offers objectivity and fairness to all parties, and will help avoid the predictable traps and pitfalls of family conversations.

What if you don’t think your child would be a good fit for the business?

Keep in mind that family and business are two separate entities. Not every child is suited to work in their family’s business and a bad experience can stress family relationships beyond repair. Most parents are very concerned about doing the right thing by their kids as well as needing to protect the success of the family enterprise. Ultimately, you may have to decide whether or not the adage is true that, ‘there is no business gain worth a family loss.’

Ricci M. Victorio, CSP, is managing partner at Mosaic Family Business Center. Reach her at (415) 788- 1952.

Published in Northern California

Most people are not comfortable talking about their finances, even with family members. Parents especially can have a fear of sharing their estate and succession plans with their adult children; they’re afraid of upsetting harmony in the family, or they’re sometimes avoiding the perceived greed of hearing their heirs talk about “I want this, I want that...”

Yet, if they’re not communicating, then really it’s an artificial harmony, and the family won’t understand the effort the parents went through to create a fair plan, says Ricci Victorio, managing partner of the Mosaic Family Business Center.

“One of the most important aspects in planning for your family legacy, whether there’s a family business or just significant wealth, is communication,” she says. “Parents often use the family holidays, like Thanksgiving, to explain their gifting strategy. But these kind of family settings are almost always inappropriate for discussing emotional or delicate issues. The result is that the family will dread attending the next holiday or family event because they remember the blow-up that happened last year.”

Fortunately, discussing finances with the family and maintaining family harmony don’t have to be mutually exclusive. A better setting for those kinds of discussions is in a “family council” meeting.

Smart Business spoke to Victorio about using a family council to tackle the often daunting task of communicating with family members about estate and succession planning.

How can the process of family decision-making become easier?

One of the best venues to discuss the business of the family is in a ‘family council.’ What we’ve learned is that people should separate family gatherings from family business discussions. A more formal setting encourages a more professional and organized approach, often by having advisers and a facilitator present to help explain things in a way that won’t upset or confuse.

Unmet expectations or anxiety about the unknown can seriously undermine family harmony. Whether there is conflict or not regarding the succession plan or the division of assets you can sidestep potential years of tension and upset by tackling these tough discussions step by step with the guidance of a trained facilitator. Knowing, even if you don’t like the answer, is most often better than being in the dark.

How does a family council work?

Once a family makes a commitment to using a family council, I like to help them develop a ‘Family Charter.’ It’s a statement of purpose and vision and helps to define the core values that are important to communicate to the next generation. Objectives and goals are defined, which helps to keep everyone focused on creating an agenda for each meeting. With regular meetings and the integration of younger family members as they mature, this mechanism for problem-solving and planning for the future will be passed on to each generation long after it was initially created, contributing to building the family legacy.

Once I get to know the parents and their plan, what they want to communicate and what they’re comfortable communicating, I survey each of the involved family members. I ask such questions as: What do you know about your parents’ estate plans? What do you want to know? What is your vision of the future? If there’s a family business, to what do you attribute its success, and what are some ways you can think of to perpetuate that?

Another way families can better communicate is to learn one another’s personality styles. Understanding what kind of leadership styles are natural to each individual can make it clear where there might be points of tension. Often, conflict happens due to different personality styles, rather than it being intentional. Initiating a family council by learning about the best ways to approach one another as difficult decisions are made makes it much easier to talk about other complicated issues.

What kinds of issues are discussed?

In laying out an estate plan — especially one that is quite involved or intricate, where a family business or any kind of considerable assets are involved — the more complicated it gets, and the more you need to layer in the pieces of information. We can explain the concept of the estate plan and the succession plan without using numbers. Then it becomes more clear why, for example, siblings who are involved in the business are going to inherit voting stock in the business, and the non-active kids might either receive non-voting stock or other assets like real estate or securities or something of a fairly equitable range.

A family council can’t just be convened one time. It really needs to become a part of how you address the business of the family. And it may not always be related to estate planning — it could be used to talk about difficult family matters, charitable gifting, or other ways to support the community. You can also use it to introduce family members to a financial planner or to broach the subject of insurance or investing to help the kids learn how to handle the money they’ll inherit. A family council sets an atmosphere where everyone knows they’re going to be professional and courteous, even when making difficult decisions.

Who should consider a family council?

There are various levels of family councils, and I would suggest that families of more than one generation who have a family business or significant assets absolutely must consider this kind of vehicle. Every family needs to be able to communicate what their planning is to those impacted. The worst thing that can happen at the time of loss of a parent is to also experience the shock and surprise of not understanding what they had intended. You don’t want your kids resenting each other because they didn’t understand why Mom and Dad made the decision they did.

When someone says, ‘I’d rather just let them figure it out when I die,’ it’s setting the stage for eventual conflict. What kind of legacy is that? This isn’t the way you want to be remembered. Leaving a legacy of love and harmony, and then security and business success, would be any business owner’s dream.

Ricci Victorio is managing partner of the Mosaic Family Business Center. Reach her at (415) 788-1952 or

Published in Northern California