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*A Book Review*

Family Wealth—Keeping It in the Family

By James E. Hughes, Jr.

by Michael C. Gray

February 8, 2006

"Shirtsleeves to shirtsleeves in three generations." Attorney James Hughes has found the theme of this proverb all over the world. Family wealth is usually a fleeting cycle of rags to riches to rags.

In this book that should be of interest to all families, Hughes explores this cycle and how families can break it.

According to Hughes, the first thing to recognize is that monetary capital by itself will dissipate. If future generations don’t develop the skill to preserve the intellectual capital of how to generate wealth and support the human capital of other family members in becoming the best they can be, the family capital will eventually be consumed.

Families need to develop strong relationships throughout in order to continuously preserve, communicate and develop their human and intellectual capital. The focal point that this effort revolves around is a family mission statement – what makes our family different? Family history stories help in communicating and maintaining the family values and bonding relationships.

Family leaders need to be developed to maintain the direction of the family. Aunts and uncles should be mentoring their nephews and nieces. Grandparents can teach family values by having grandchildren involved in making philanthropic gifts and volunteer service.

Hughes suggests that families should have representative family governance structures based on the U.S. government model, with legislative, executive and judicial "branches." Adult family members can at least participate as "voters."

When family assets are held in trust for minor family members, the trustee should function as a regent, preparing the beneficiaries to eventually independently manage their assets.

Hughes also suggests that families should be diversified geographically in several countries, like the Rothschild family did in banking. Family members were stationed in various countries to build a family banking empire.

When you consider the investment of time and money and the degree of cooperative effort required to implement the model that Hughes is suggesting within a very individualistic culture like the United States, you can understand why maintaining family wealth beyond three generations is so difficult. By following the recommended procedures, families might not only preserve their monetary wealth, but also make significant humanitarian contributions to the societies that they live in.

Buy it on Amazon: Family Wealth--Keeping It in the Family: How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations.

For our new reviews of business and self-improvement books, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight!

Family Wealth - Keeping It in the Family, by James E. Hughes, Jr., has some good ideas on how to maintain wealth through generations.

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Michael Gray, CPA
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