The Importance of Having a Family Charter and How to Draft It

By Prof Sergio Guerrero Rosas, Guerrero y Santana, S.C.

The family charter is one of the most important assets that a family business may have. It is a document that clearly defines a family business and provides future guidance to it. The family charter is so valuable that it can be equated to a treaty.

The family charter establishes the definition of the family business and its relationship with all the family members. It identifies the family business legacy left by previous generations and captures the mission and vision for the family members of tomorrow.

The creation of a family charter is an important step to guarantee that both the family and the company are aware of the rules that will guide them and what can be expected of each other. While the adoption of a family charter can be uncomfortable or awkward at the beginning, it can be useful in informing, reassuring, and successfully guiding everyone who has an active interest in the success of the family business and a personal interest in maintaining peace in the family.

Another benefit of the family charter is that it can serve as a safeguard against potential problems that may arise due to misunderstandings or differences of opinions. The following steps should be considered when creating a successful family charter.

  1. Analyse and understand in detail the characteristics of the family business, what makes it unique, and its strengths and weaknesses.
  2. Generate trust in order to ensure its success. All members should be made aware of its creation in order to generate a shared conscience by establishing an open communication line that allows all family members to be able to speak openly about any diffculty they may find. This will help everyone to understand its importance and relevance.
  3. Meet regularly and maintain an open dialogue, analyse the feedback received from each member, and enable group discussions that allow agreements to be reached effciently.
  4. Once consensus has been reached, move forward in a clear and focused manner, establishing a specific schedule that contains the most viable strategy to achieve the short- and medium-term goals.

Prof Sergio Guerrero Rosas

Prof Sergio Guerrero Rosas

GGI member firm
Guerrero y Santana, S.C. Advisory, Auditing & Accounting
Corporate Finance, Law Firm Services, Tax
Tijuana, Baja California, Mexico
T: +52 333 120 05 38
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Guerrero y Santana, S.C. provides its clients with a wide range of tax, legal, and consulting services. The firm has been helping clients – from individuals and small local businesses to major corporations and multinationals – to achieve their smallest aims and grandest ambitions. They are committed to providing specialised, personalised services to all those seeking reliable and up-to-date tax, legal, and business support.

Prof Sergio Guerrero Rosas, Managing Director at Guerrero y Santana, has over 25 years’ experience advising companies from SMEs to multinationals, as well as individuals, on tax and estate planning. He is also Global Vice Chairperson of the Trust and Estate Planning Practice Group and Latin American Chairperson of the GGI International Taxation Practice Group (ITPG).


Published: Trust & Estate Planning Newsletter, No. 07, Spring 2021 l Photo: javarman - stock.adobe.com

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