Family Wealth E-Book

James E. Hughes

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg
• Sprache: Englisch

Seitenzahl: 356

Veröffentlichungsjahr: 2010

Beschreibung

The landmark book that changed the way exceptional families think about their heritage, their wealth, and their legacy to future generations--now revised and expanded. Every family, looking at the next generation, hopes to confer advantages that are more than just material and financial--to inculcate character and leadership, to inspire creativity and enterprise, to help all family members find and follow their individual callings, and to avoid the financial dependency and loss of initiative that can all too often be an unwanted consequence of financial success. Yet many families never succeed in realizing that vision, much less sustaining it for three, four, or five generations and beyond. James Hughes has thought deeply about these challenges, and his insights are at once practical and profound. For more than three decades, he has personally guided multiple generations of families in creating strategies to preserve their human and intellectual capital as well as their financial assets. His teachings synthesize insights from psychology, anthropology, political history, philosophy, economic theory, and the law, with examples ranging from Aristotle to cutting-edge social science theory. His ideas have been taken up by numerous exceptional families, by their advisers, and by scores of authors, practitioners, and academics who have found value in the methods he pioneered. The first edition of this book, privately published, became a word-of-mouth classic. Now, Hughes has updated and substantially expanded it with new chapters that challenge conventional notions of wealth and offer guidelines for conserving family assets in the broadest senses. Filled with tested principles and practices for family governance and joint decision making, it is a rich source of workable wisdom that family members can put into practice today, to the enduring benefit and gratitude of future generations.

Leseprobe

Table of Contents

Praise

ATTENTION CORPORATIONS

Title Page

Copyright Page

Dedication

Acknowledgements

Introduction

PART ONE - My Philosophy

Chapter One - Long-Term Wealth Preservation as a Question of Family Governance

I. The Question

II. The Problem

III. The Theory

IV. The Solution

V. The Practice

PART TWO - Family Practices

Chapter Two - The Family Mission Statement

Chapter Three - Ritual

Chapter Four - The Family Balance Sheet and Family Income Statement

The Family Balance Sheet

The Income Statement

Chapter Five - Investor Allocation

Chapter Six - Two Important Practices

Hat Work

Grandchild/Grandparent Philanthropy

Chapter Seven - The Family Bank

Chapter Eight - Protectors, Advisers, Mentors, and Hommes d’Affaires

Protectors

Advisers

Mentors

Hommes d’Affaires

PART THREE - Roles and Responsibilities

Chapter Nine 9 - Control Without Ownership

Chapter Ten - Beneficiaries

Chapter Eleven - Trustees

Administration of the Trust

Investment of the Trust

Distribution of the Trust

Chapter Twelve - Family Philanthropy

Chapter Thirteen - Evaluating the Next Generation

Chapter Fourteen - Peer Review

Chapter Fifteen - The Private Trust Company

PART FOUR - Reflections

Chapter Sixteen - The Role of Aunts and Uncles

Chapter Seventeen - The Art and Practice of Mentorship

What Mentorship Is Not

The Six Functions of a Mentor

In Closing

Chapter Eighteen - The Role of Elders

Chapter Nineteen - The Trustee as Mentor

In Conclusion

Chapter Twenty - The Trustee as Regent

Chapter Twenty-One - Unexpected Consequences of a Perpetual Trust

The Law of Unexpected Consequences

Society and the Perpetual Trust

The Law of Entropy

EPILOGUE

BIBLIOGRAPHY

INDEX

About the Author

About Bloomberg

PRAISE FOR THIS EDITION OF

Family Wealth—Keeping It in the Family:How Family Members and Their Advisers Preserve Human,Intellectual, and Financial Assets for Generations

BY JAMES E. HUGHES JR.

“Dr. Maslow taught us that once we took care of the basics, we could concentrate on higher callings in our lives. James Hughes teaches us that most families, once they have achieved the pinnacle of success, are faced with the threat of not preserving their wealth. What can be done to break this unending cycle of rags to riches to rags? Any family member or adviser to them should read this landmark work. We therefore give it to every family we educate, as a gift to them and their future generations.”

—THOMAS R. LIVERGOOD, CFP President, Family Office Management CEO and Founder, The Family Wealth Alliance

“What is most transformational about Jay Hughes’s message in Family Wealth is his emphasis on the value of ‘human capital’ and his insight that within wealthy families, the real wealth lies in the individuals who make up the family, not in their balance sheet as it is conventionally understood. The self-evident truth of Hughes’s analysis, borne out time and time again, should not be revelatory, but sadly, for too many families, those with wealth and those of more moderate means, it is. Family Wealth is a brilliant case statement for the importance of the nurturing of character, of self-confidence, and of respect for the value of work. This book broadens our understanding of the many different forms of capital, intellectual, emotional, and social. It is a must read for all those who care deeply about their families.”

—H. PETER KAROFF Founder and Chairman, The Philanthropic Initiative, Inc.

“A very important work”

—GEORGE D. KINDER, CFP Author of The Seven Stages of Money Maturity Founder of the Kinder Institute of Life Planning

“Family Wealth—Keeping It in the Family is a masterpiece. No one is more astute than Jay Hughes about the topics of family wealth and family life.”

—CHARLES W. COLLIER Senior Philanthropic Adviser, Harvard University

“Jay Hughes’s reflections have dramatically changed the way exceptional families view their assets. His views on family governance, the family balance sheet, and control without ownership are essential reading for insightful families hoping to preserve their most important capital. Jay’s contributions to the industry are immeasurable and much appreciated.”

—SARA S. HAMILTON Founder and CEO, Family Office Exchange, LLC

“‘Those who do not learn from history are doomed to repeat it.’ Jay Hughes, a passionate student of history, believes this more than most. His work with families, including his own, gave him the gift of learning the history of many, many families. Within that context he has written a book that illuminates previously only dimly lit concepts. For example, how can grandparents be the catalyst for the next generation’s success? How should a family measure its own success as a family? Within IPI are many families indebted to Jay Hughes. He has shared with them the history of families and even more importantly, a blueprint for their own family’s success.”

—CHARLOTTE B. BEYER Founder and CEO, Institute for Private Investors (IPI)

“This is the best book on family wealth preservation yet written. I would rate this book a ‘10’ on a scale of 1 to 10. Jay Hughes helps people re-examine and redefine what their true family wealth is (hint: it’s not money). Well if it’s not the money, what is it, and how do you use the money to define, protect, and grow true family wealth for generations to come?

“That is the question Jay encourages families to explore and answer in this book. Regardless of your level of financial wealth, if you desire to use your resources to plant and grow a healthy family and create an environment from which its members can thrive on their own, this is a great book for you.”

—THOMAS C. ROGERSON Senior Director of Wealth Management, Mellon Private Wealth Management

“Jay Hughes has taken his classic on family wealth to a new level of maturity and relevancy. It is a smart and sophisticated book offering both philosophical and practical insights on wealth stewardship. The sections on mentors, elders, and other key family members expand upon sage advice from the original edition.

“Family Wealth is a must read for family members, their advisers, and all those interested in deepening their understanding of how the affluent family can grow and sustain its most important asset—the human lives of the family and their connection to each other.

“Family Wealth is, as was true of the original edition, an impressive piece of work that is a foundational resource for wealthy families as well as the professionals of wealth consultation.”

—DR. STEPHEN GOLDBART AND JOAN DIFURIA Co-Directors, Money, Meaning, & Choices Institute

“Jay Hughes has given his distinguished career to the service of family legacy. He takes an approach to wealth preservation that values not only money but people. He shows us in Family Wealth—Keeping It in the Family why that approach matters and how it works for the family that wants a better future for itself and the world at large.”

—PETER WHITE Managing Director, Family Advisory Practice, Citigroup Private Bank

“All of us in the wealth management field have benefited by Jay Hughes’s return to advising families on the responsibilities of having money. His unique background bridging law, religion, history, and philosophy provides a number of valuable anecdotes that are truly priceless lessons—not only for those who have money, but also for those who are servicing this sector in wealth management.

“Family Wealth—Keeping It in the Family is truly an ageless document that would have been as relevant in the 1820s as it will be in 2020. Mr. Hughes’s writings and presentations have become the ‘bible’ in family governance and estate planning, spawning a number of disciples lecturing about his concepts of human, intellectual, and financial capital. We thank Mr. Hughes for his priceless gift of Family Wealth,which simplifies the understanding of the privilege of creating, inheriting, or owning money.”

—TONY GUERNSEY President, Wilmington Trust FSB New York

“Jay Hughes has been able to take his rich and extensive experience in the field of wealth preservation and distill it into an essential guide for the creation of legacy families. Family Wealth provides family members and their advisory teams invaluable direction as they develop a strategic plan for utilizing wealth for the purpose of creating generations of successful, productive families.”

—LEE HAUSNER, PH.D. Author of Children of Paradise: Successful Parenting forProsperous Families Partner of IFF Advisors, LLC

“In this book, Mr. Hughes literally brings to bear the wisdom of the ages in guiding the reader through the maze of stumbling blocks thwarting successful wealth preservation. His focus is healthy and holistic, centered on the preeminence of the family’s human capital rather than the size of its coffers. As such, it is not a how-to book for those looking to hoard their wealth. To the contrary, this is an incredibly provocative, thoughtful (some might even say spiritual) guide. Its chapters light the pathway toward the responsible shepherding both of the people and the assets that, when properly aligned, make up a family’s true ‘wealth.’ It is a must read for those we call patriarchs and matriarchs, their key intermediaries, all trustees and beneficiaries, and everyone who aspires to earn the title ‘trusted adviser.’

“We who have dedicated our careers to the responsible use and constructive redeployment of wealth are privileged to have someone of Jay’s caliber leading the way.”

—MICHAEL J. A. SMITH Head of Wealth with Responsibility Program, U.S. Private Wealth Management, Deutsche Bank

ATTENTION CORPORATIONS

This book is available for bulk purchase at special discount. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets, or phone [phone].

© 2004 by James E. Hughes Jr. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 731 Lexington Avenue, New York, NY 10022 or send an e-mail to [email protected].

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This publication contains the author’s opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the author, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the author, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

Revised and Expanded Edition published 2004

ISBN-13: 978-1-57660-151-8

The Library of Congress has cataloged the earlier printing as follows:

Hughes, James E. Jr.

Family wealth : keeping it in the family : how family members and their advisers preserve human, intellectual, and financial assets for generations / James E. Hughes, Jr. -- Rev. and expanded ed.

p. cm.

Includes bibliographical references and index.

1. Estate planning--United States. 2. Finance, Personal--United States. 3. Family--Economic aspects--United States. I. Title.

KF750.Z9H827 2004

332.024’016’0973--dc22 2004001451

To my father, James E. Hughes Sr., an extraordinary adviser to families and the wisest man I know;

to my mother, Elizabeth Sophie Buermann Hughes, who first taught me about family and who keeps creating family;

and to my partner in life and learning, Jacqueline Merrill, who put her arm through mine.

ACKNOWLEDGMENTS

Over the thirty-six years I have been journeying to learn the things I am sharing with you in this book, I have been mentored by many wonderful and extraordinary people. It is impossible to list each of you who have been of special help, and naming (in the case of my clients) you who have been my greatest teachers is unthinkable, as my honoring of your right to privacy is my greatest responsibility.

I would like to extend special thanks to my colleague Anne D’Andrea, without whose unfailing support this book could not have been written; to my typists, Rose Casella and Ann Cassella; to my wonderful office staff, Julianna Blunt, Linda Jackson, and Rita Jackson; to my readers of the original edition, Peter Karoff, John O’Neil, Sara Hamilton, and Joanie Bronfman; to my original publishers, Peter Hughes and Judith Arnold; and to William Lyons and Jared Kieling, who helped edit this revised edition.

My thanks also to Virginia and Juan Meyer, Suzan Peterfriend and Howard Shapiro, Ellen Perry, Rob Stein, Rosemary and Scott Reardon, Janet and Ed Miller, Henry Wyman, Ralph Wyman, Hap Perry, Peter Sperling, Robert Meyjes, Louis Dempsey, John King, Michael Smith, Richard Bakal, Christopher Brody, James Fordyce, Neen Hunt, John Stewart, Serge D’Araujo, Maria Elena Lagomasina, Terrence Todman, Tim Hawkins, Charles Vaughan-Johnson, Steven Hoch, Jim Jones, Ed Rudman, Patricia Meyer, James Deane, Walter Noel, Thomas Salmon, James Goodfellow, Florence Pratt, Patricia O’Neil, Nancy R. Hughes, Ellen Webster and John Webster, Nancy Elizabeth Hughes, Natalie Burton and Matthew Burton, Ned Rollhaus and Catherine Rollhaus, Alyssa Johl, Jennifer Fletcher, Roy Williams, John de Lande Long, Philip Lieberman, Kathy Wiseman, John Trask, Norman Wylie, Heidi Steiger, Francois de Visscher, Mary Lehman, Kate Aron, William Veale, Barry McCutchen, Patrick Soares, David Horn, Mark Pollard, Kathryn McCarthy, Barry Geller, Sandra Lopez-Bird, Bente Strong, Tony Geurnsey, Lee Hausner, Daniel Garvey, Edward Bastian, James Ruddy, David Gage, Bryan Dunn, Michael Orr, Paul Setlakwe, Brian Rose, Dianne Neimann, Ellen Kratzer, Samuel Minzberg, Stephen Nelson, Hugh Freund, Kana Higashima, and Stephen Johnson.

Likewise, thanks to Warren Whitaker, Davidson T. Gordon, Chris Armstrong, Cliff Green, Charles Smith, John Layman, Nancy Lamb, Roberta Ruddy, Thomas C. Ragan, Jane Gregory Rubin, Mary Elizabeth Freeman, Mimi Hutton, Barry Wall, Joseph A. Field, Van Kirk Reeves, William Kriesel, Michael Pfeifer, Eugene Wadsworth, George R. Farnham, Emilio A. Dominianni, Agnes Anthony, D. Robert Drucker, Jr., Donald Kozusko, John Lahey, Richard Layman, Kenneth Hochman, Michael Horvitz, David Cowling, Anthony Stewart, Ben Fishburne, Chris Dugan, Richard Pogue, Richard E. Andersen, Barry Cass, Richard Guelph, Frank Wallis, Larry Brody, Robert Lawrence, Henry Zeigler, Edwin Matthews, Brian Fix, Ernst Stiefel, Jack J. T. Huang, David Morse, Walter Surrey, Mark Lebow, Gerald Dunworth, Hugh Fitzgerald, Gail Cohen, Marta Gucovsky, Peter Edwards, Edmund Granski, Jr., Ray Moore, Milo Coerper, David du Vivier, Charles Torem, Phillip Schreiber, Thomas Bissell, Dave Knudson, John Duncan, Rebecca Dent, Patricia M. Angus, Erin Stephen, Debra Treyze, George Harris, Nicola Jones, Anne Hargrave, Chester Weber, Brian McNally, Marna Broida, Bonnie Brown, Marilyn Mason, William J. Miller, Hill S. Snellings, Peter Evans, Art Black, Brett Barth, Evan Roth, Ulrich Burkhardt, Alex Von Erlach, Kenneth Polk, Spencer Sutton, Hunter Wilson, John Rhodes, Caroline Garnham, Richard Pease, Grant Stein, David Bird, Tim Ridley, John Campbell, Frank Mutch, Alec Anderson, Anton Duckworth.

Finally, to my son, William H. R. Hughes, my deep appreciation and thanks for the extensive editing he did to make this revised and updated edition come true. Working with him has been the best example of keeping it in the family I can imagine.

INTRODUCTION

Thank you for honoring me by opening this book and taking the journey it offers. To begin a journey is an act of courage. I hope your courage will be rewarded by new ideas and practices that will enable your family to preserve its wealth long into the future. To those of you (pilgrims on the road to Compostella) who read the first edition of Family Wealth: Keeping It in the Family, welcome back to the journey seven years later. I hope your journey so far has been rewarding and that your family governance systems are functioning well. I also hope you will find the ideas on elders, ritual, practices, evaluation of the third generation, mentorship, and the role of the homme d’affaires, newly included in this revised edition, a way to see what I have learned since we parted. To all who are journeying with me, let me paraphrase what Chaucer says at the beginning of the As we are all pilgrims journeying to Canterbury individually, why not walk together and tell each other our stories? This is my story of family, and I welcome your stories as they join mine.