The Dynasty Code: Governance & Next Gen Prep
The Dynasty Code: Governance & Next Gen Prep
Defeating the “Shirtsleeves to Shirtsleeves” curse: How to transfer values before transferring value to ensure the money survives the third generation.
Executive Summary
- The 90% Rule: Statistics show that 70% of family wealth is lost by the 2nd generation, and 90% is gone by the 3rd. The cause is rarely poor investment, but rather a lack of trust and communication among heirs.
- Family Constitution: A non-binding but morally weighty document that defines the family’s mission, values, and the “Rules of the Road” for family members entering the business or accessing funds.
- The “Skin in the Game” Policy: Smart families require heirs to work outside the family business for 3-5 years and earn a promotion before joining. This prevents the “Entitlement Trap.”
Fair vs. Equal
A crucial governance principle: “Fair is not always Equal.” Treating all children equally (e.g., giving voting shares to a disinterested child) can destroy the business. Assets should be distributed fairly based on merit and stewardship capacity.
Mechanic: The Governance Grid
90% Lost
Gen 3 Failure Rate
Quarterly
Family Assembly
Constitution
Rule Book
Stewardship
Core Goal
Simulation: The 3-Generation Outcome ($50M Starting)
Wealth Trajectory over 60 Years
| Structure | Participants | Primary Function |
|---|---|---|
| Family Meeting | All Family Members | Bonding / Updates / Fun |
| Family Council | Elected Representatives | Decision Making / Policy |
| Family Assembly | Shareholders (18+) | Education / Next Gen Prep |
“You do not own the family wealth; you are merely its steward for the next generation. The goal is not to leave a better planet for our kids, but better kids for our planet.”
Essential Resources
INTERNAL
BMT Playbooks