Family Investment Companies: family values, succession and wealth stewardship
As part of our new series on Family Investment Companies (FICs), we explore how these structures can help families protect and grow their assets, how control may be passed down generations, and how to manage the all‑important issue of share transfers.
Using FICs to Embed Values and Stewardship Across Generations
A Family Investment Company allows founders to pass down wealth gradually and intentionally, in line with a clear family strategy and vision. Beyond the tax and investment benefits, the structure of a FIC gives families the ability to:
- Use different share classes to control voting rights and economic participation.
- Build governance frameworks that promote shared decision‑making.
- Embed family values and long‑term aims into the way the company is run.
Increasingly, families are linking their FIC to a broader vision for the next generation, often captured in a family charter or similar document. These charters set out aspirations around financial responsibility, education, communication and legacy. The FIC then becomes part of a wider stewardship approach—less about simply passing down assets, and more about strengthening family identity and purpose; making sure this brings the family together rather than sowing division.
Why Families Use FICs to Keep Ownership Within the Bloodline
With this longer‑term vision in mind, it is unsurprising that families want the ownership and control of a FIC to remain firmly within the family, regardless of what the future may hold.
For that reason, FICs commonly include prescriptive rules around the transfer of shares. These provisions often:
- Permit transfers down the family bloodline, allowing each generation flexibility to undertake their own lifetime planning; and
- Completely prohibit transfers outside that line—including, frequently, transfers to spouses.
The restriction on spousal transfers is deliberate. In the event of a divorce, shares that have passed to a spouse would otherwise fall outside the control of the family. Carefully drafted transfer mechanics help ensure the shares remain with the intended family group and cannot be diverted elsewhere.
How Transfer Restrictions Interact With the Family Courts
Share transfer provisions do not exist in isolation. Even if the company constitution prevents transfers to a spouse, the family courts may still take the value of the shares into account on divorce. The courts could order that other assets (such as the matrimonial home) be redistributed to create a balance to achieve the court’s objective.
For families who wish to go further, it is possible—depending on the circumstances—to place the value of FIC shares entirely outside the matrimonial pot. This is usually achieved through a pre‑nuptial or post‑nuptial agreement. These agreements need to be carefully drafted and require specialist advice, but they can provide a strong layer of protection if put in place early enough. Some families make it a requirement that anyone receiving shares in the FIC must agree to enter into a pre- or post-nuptial agreement in respect of those shares.
Safeguarding Family Assets Through Robust Governance
Ultimately, clear transfer rights and well‑thought‑out asset protection measures are central to the success of a FIC. They help ensure that the company reflects the family’s wishes not only today, but for generations to come.
FICs allow families to think beyond the traditional concept of inheritance—towards stewardship, education and shared purpose. They reinforce family cohesion while protecting wealth in a structure built for longevity.
Thanks for reading, and look out for future insights in our Family Investment Company series.
