Center for Family Legacy | January 2025 Navigating wealth transition

Family governance structures are deeply intertwined with every other aspect of wealth transfer, as shown in the 16-year 120-family research study Bridging beliefs and behaviors: Key insights into effective wealth transfer across generations. Based on Truist Wealth Center for Family Legacy’s extensive experience, families who establish family councils, assemblies, or boards and engage in governance conversations early in the transition planning process are more likely to achieve successful multigenerational wealth transfer. Governance frameworks lay the foundation for smoother leadership transitions, stronger intergenerational trust, and effective wealth stewardship, ensuring families are well-positioned to preserve their legacy across generations.

So, what is family governance, and how does it work? The short answer is that governance is the structure and process by which a family will make critical decisions related to all their shared assets and long-term legacy planning. It provides an organized forum for this important work.

Many believe that family governance is mainly about legal documents like wills or trusts, but that’s only one component. Crucial decisions must be made before any legal documents are ever drafted. “We educate families on family governance and why it’s important, especially when shared decisions around property or investments are required. Governance frameworks help ensure clear decision-making and provide a structure where everyone can participate,” says Carolann Grieve, managing director of family governance.

Family governance is distinctly different from corporate governance because it’s only morally binding. In other words, family members must agree to do something and then, based on their own moral compass, follow through. Family governance identifies family leaders or future leaders and can create opportunities for involvement for family members who are not directly engaged in any of the family’s businesses. One way to achieve this is through the development of a family council, perhaps consisting of various committees. These committees can focus on any number of complex situations, including family development, family policies, philanthropy, and even vacation planning.

One of the most productive ways to get all family members on the same page is to hold regular, facilitated family meetings. These meetings allow everyone to participate and foster an understanding of the various roles and responsibilities within the family. Truist Wealth Center for Family Legacy senior governance associate, Silke Shilling, emphasizes the importance of involving all adult family members in the initial stages of governance planning. “Everyone who will be involved in decision-making should participate in family meetings from the very beginning,” she says.

Shilling explains that all generations benefit from this inclusive approach. Younger members gain a platform to be heard. Older generations see their successors’ ability to lead in action. And the family as a whole builds cohesion that bridges gaps, instills pride, and underpins effective governance.

Family meetings also need an effective facilitator. “The facilitator’s role is to keep the family engaged and ensure everyone has a voice,” says Grieve. The facilitator remains neutral, provides guidance and structure, and effectively draws input from quieter participants. When more vocal participants seem to dominate discussions, a facilitator can provide guidance that ensures decisions are made efficiently and, more importantly, equitably.

“Family meetings are where we lay the groundwork for family governance and all it involves, and without them, the cohesion needed for successful wealth transition could be compromised,” explains Daisy Medici, managing director of governance and education. In the Truist Wealth Center for Family Legacy research, respondents across generations believe family meetings are essential. However, there’s a gap between how family members feel about the importance of these meetings (high) and how they engage with them (low). This is an additional benefit of having a qualified third-party facilitator. Many families struggle to gain active participation, particularly from the younger generations—a challenge a facilitator can help overcome.

Family policies are crucial to the success of a family’s governance system. They provide agreed-upon guidelines for family behavior and decision-making. Policies can cover an extensive range of challenges, including, but not limited to, a code of conduct, risk management, and managing shared family properties. A well-defined policy framework helps families avoid misunderstandings and conflicts in the present and the future.

Truist Wealth Center for Family Legacy research found that families surveyed recognized the importance of governance policies but found the implementation challenging. Although forming family councils, assemblies, and boards is seemingly easier, family policies are also a critical piece of the overall framework.

Medici often sees families find success by starting with policies related to shared vacation properties. “This is a common family policy we introduce because these properties often become a source of conflict once the parents are no longer in control,” she says. “With a policy, you can set expectations around vacation scheduling, stocking the kitchen, and paying for repairs.” It might seem merely tactical, but long and intense conflicts have arisen within families because time at a property is connected to priceless memories and family interactions.

Truist Wealth Center for Family Legacy research shows that families who develop formal policies early in their governance journey are better equipped to handle transitions and potential conflicts. In recent years, survey participants have rated the perceived importance of family policies more highly—up by 16%. Families are reflecting a broader recognition of how critical these guidelines are for maintaining order and clarity. As family dynamics evolve, transparent and structured policies help lessen the tensions that typically surround intergenerational wealth transitions to ensure they are as seamless as possible.

Even in the easiest of situations, conflicts arise. “This is why establishing conflict resolution frameworks is critical,” says Shilling. She continues, “Conflict is inevitable, but it can be healthy if managed well.” Good family governance doesn’t eliminate tension or prevent conflict, Shilling explains, but it does reduce the chance that conflict will arise. “Our goal is to prepare families with open communication and a platform for addressing disagreements before they escalate.” One way to avoid conflict is through frequent honest, open, and empathetic communication.

When conflicts arise, mediation or third-party facilitation can be introduced to ensure that all perspectives are heard and that disagreements are resolved in a fair and structured manner, Medici explains. “The more complex the family dynamics, the more essential it becomes to have a structured approach to conflict resolution,” she says.

Grieve goes further, observing that in her experience working with even the most complex multigenerational families, “Conflict can be an opportunity to strengthen relationships if approached constructively and with a focus on shared goals.”

A best practice is to extend beyond only having reactive processes for resolving conflict. Adding regular check-ins to uncover places where expectations, values, or goals are concealed or not aligned is an essential part of conflict mitigation. These check-ins can prompt conversations that can address and de-escalate tensions before they become more volatile.

Truist Wealth Center for Family Legacy research indicates families are experiencing more conflicts outside of family meetings. This isn’t because they aren’t getting along as well as they used to. Instead, when members are less engaged in family meetings, they experience conflicts in other settings.

Succession planning is integral to family governance. “Succession planning is not a stand-alone practice,” Medici asserts. “It’s part of family governance. It helps families ensure continuity of leadership by preparing the next generation well before the need arises.” Medici sees many Truist Wealth clients coming to the Center for Family Legacy primarily for help with succession planning. These families may have already sold their businesses and are now managing a substantial pool of wealth through diverse investment vehicles. Managing the proceeds of a business sale is complex, can be sensitive, and requires a guiding hand to help navigate a new set of family circumstances.

Who is your family’s natural successor? Based on tradition, many would answer it’s the eldest male. In families with a closely held business, the family successor might be assumed to be the same as the business successor. But multiple factors, not just gender or business experience, are involved in choosing a successful successor. Shilling recommends planning for new leadership well before the older generation steps down. “The earlier you have these conversations about what succession should look like for the family, the better-prepared everyone will be. The first generation can still guide the next,” she says.

What happens when a leader is reluctant to cede control? According to Grieve, in cases where the current generation doesn’t want to yield to the next generation, it’s typically a life event that makes a leader face their own mortality. These events often beneficially lead to rapid change and a willingness to mentor future leaders. This succession is critical to helping prepare the next generation to carry on the family legacy. Truist Wealth’s Center for Family Legacy experience shows that families benefit from putting a cohesive succession plan in place and pairing it with education, mentorship, and transparent communication.