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

248 Pages·2004·6.02 MB·English

by  James E. Hughes Jr.

Family Wealth
— Keeping It in the Family —
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Family Wealth
— Keeping It in the Family —
How Family Members
and Their Advisers Preserve
Human, Intellectual, and Financial Assets
for Generations
Revised and Expanded Edition
James E. Hughes Jr.
P R I N C E T O N
© 2004 by James E. Hughes Jr. All rights reserved. Protected under the Berne Convention.
Printed in the United States of America. No part of this book may be reproduced, stored
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Revised and Expanded Edition published 2004
1 3 5 7 9 10 8 6 4 2
Library of Congress Cataloging-in-Publication Data
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.
ISBN 1-57660-151-X (alk. paper)
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.
Contents
Acknowledgments ix
Introduction xi

Part One: My Philosophy
1 Long-Term Wealth Preservation as a Question
of Family Governance 3
Part Two: Family Practices
2 The Family Mission Statement 43
3 Ritual 51
4 The Family Balance Sheet and Family Income
Statement 57
5 Investor Allocation 63
6 Two Important Practices 69
7 The Family Bank 79
8 Protectors, Advisers, Mentors, and Hommes
d’Affaires 85
Part Three: Roles and Responsibilities
9 Control Without Ownership 97
10 Beneficiaries 103
11 Trustees 111
12 Family Philanthropy 125
13 Evaluating the Next Generation 133
14 Peer Review 141
15 The Private Trust Company 147
Part Four: Reflections
16 The Role of Aunts and Uncles 157
17 The Art and Practice of Mentorship 161
18 The Role of Elders 173
19 The Trustee as Mentor 181
20 The Trustee as Regent 189
21 Unexpected Consequences of a Perpetual
Trust 195
Epilogue 209
Bibliography 211
Index 219
ACKNOWLEDGM ENTS
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 pub-
lishers, 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
ix
x Acknowledgments
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.