Dear Advisor:

We are planning our first family meeting. Our family is quite large and spread out, so there will be considerable expense involved in getting everyone together. While we want to encourage everyone to attend and would like to include family members and spouses, we do have some concern about the budget. We also know that we will be setting a precedent for how to handle these expenses going forward. What is your recommendation for reimbursement of travel expenses related to family meetings?

Many client families view family meetings as “shareholder education.” The closer and more unified the family and family shareholders, the greater the likelihood of a supportive, informed, and unified group. Family meetings can be viewed as a cost of doing business. In the case of a family business, it is wise to invest in education for spouses and children even if they aren’t shareholders, because shareholder education is important for these groups (as future shareholders and their guardians) as well.

The following guidelines should be helpful in all aspects of planning your family meeting, not just expense reimbursement:

1.  It is almost always better to be inclusive rather than exclusive, for the reason stated above.  The definition of family differs from group to group.  We encourage inclusion of spouses and children.  Some families include future in-laws as well.

2.  Put this very question on the family meeting agenda. Don’t allow it to be personal, just state the facts: We have an exponentially growing pool of family and shareholders. We feel that shareholder education and family unity is critical. But we in operations, who are responsible for managing the family’s capital, are uncomfortable making this decision and would benefit from shareholder input. How do YOU recommend we answer this dilemma?

3.  Some families set aside a percentage of either revenues or net income for shareholder education, and allow that number to guide what the company can afford to pay for.

4.  Most definitely make the meetings so tremendously wonderful that even if the company cannot afford to pay for all, those who are not covered by the policy are eager and willing to pay their own way.

5.  Consider working with a meeting planner and a travel agency to manage costs.

6.  Consider looking for ways that spouses can contribute value to the meeting by leading discussions or managing parts of the meeting—a sort of earn-their-way philosophy.

7.  Some families agree to determine shareholder dividends AFTER paying for family meeting expenses.