Family businesses have corporate governance structures in check. What about family governance?

Most business owners are familiar with the concept of corporate governance and the use of corporate boards. These owners know that once their businesses reach a certain point, the input of a fiduciary or advisory board whose primary function is to maximize the value of the business for the shareholders is invaluable.

But business owners focused squarely on running their operating business can overlook the importance of family governance. Family governance refers to the unofficial entities that oversee a family and its shared assets through multiple generations, ensuring all members of the family have a voice in how decisions about shared businesses, investments, and other assets are made. The family governance board, often referred to as a family council, is where families make important decisions that can define them for generations.

Still, too many families delay formalizing family councils, misguided by the belief their children are too young or their businesses are not substantial enough to warrant such controls. That couldn't be further from the truth.

Family governance structures can start informally and grow with the family, empowering them to make important decisions about their legacy on their terms. The following steps can help families on their path to creating a family governance council.

Establish a shared vision

Whether a first-generation business owner with young children or an operating business owned by one's grandparents, the first step toward sound family governance is to establish a shared vision for the family. Does the family endeavor to be philanthropic? Are all family members able to work in the business regardless of education or skill level? Who is considered family? How are conflicts within the family resolved? Answering these questions at the outset can mitigate potential conflict down the road.

Define decision-making structure

Creating a decision-making structure that allows family members' voices to be heard goes a long way in preventing conflict from leading to distrust, lawsuits, or estrangement. As a family, ask and answer questions such as: Who wants (or is most qualified) to sit on the family council? What decisions fall within the council's purview? How do we ensure all perspectives are considered? How do we handle disagreements?

In some situations, families may find it beneficial to have a family business advisor, estate attorney or a trusted family friend facilitate these conversations. In younger families simply talking through decisions with children can be an valuable learning experience and help cultivate shared values.

Determine meeting cadence

The family council should meet regularly, but how and where is a matter of preference. Family council meetings can be as informal as monthly family dinners or as formal as quarterly council meetings. Whether prescribed meetings or informal meals, the key is a consistent venue for family members to discuss how their vision is materializing and their shared assets being managed.

Also important is establishing a mechanism for sharing the outcomes of these meetings with other members of the family, either by email recap or newsletter.

Review and adjust

In some respect every family is a first-generation family with new spouses, fresh perspectives and new visions. Don't let your family be held back by refusing to review and adjust your vision, decision-making structure or family council members.

Unlike fiduciary or advisory boards anointed by the bylaws of an operating business, family governance boards are created by the sheer will of the family. While not legally required, they are vital to a family's ability to perpetuate its businesses and other shared assets through multiple generations. It is never too late, nor too early, to protect a family's future by establishing sound family governance.

• Robin Letchinger is the chair of the family enterprise practice at Croke Fairchild Morgan & Beres.

Letchinger has served as general counsel for multigenerational families and sat on the board for multiple family enterprises.