Generally, the Legacy Family has four capital accounts which it attempts to keep in balance. Those accounts are:
1. Financial Capital. This is the money earned as well as the investments under management. This account also includes wealth transfer strategies, family business operations, financial parenting and understanding the psychology of money.
2. Intellectual Capital. This is the family's experiences, its know-how and general knowledge. It includes education, career choices, mentoring/coaching, governing the family (how rules are made for future generations).
3. Human Capital. This is general parenting and grand-parenting skills, communication skills, values, morals, ethics, collaborative decision making and conflict resolution. This account will also contain leadership training and team building so necessary to the Legacy Family.
4. Social Capital. This is the philanthropy of the Legacy Family whether it is a donor advised fund or a family foundation.
A Legacy Family will engage in activities that build each of the four capital accounts so that the accounts are in balance. The Legacy Family will develop activities that provide for:
- effective communication among the family and other stakeholders;
- a process for collaborative decision-making;
- conflict resolution;
- identification of shared values;
- code of conduct that articulates the behaviors acceptable for family members;
- a process for acceptance of non-bloodline family members including partner choices;
- managing expectations of future generations;
- developing financial competency in all generations; and
- a process of accountability.
The following reading list will help in developing useful activities to build deposits in the capital accounts:
Eileen Gallo, PH.D. and Jon Gallo, J.D., Silver Spoon Kids: Communicating about money in healthy ways. Teaching strong values and compassion. Preventing a feeling of entitlement, 2001, Contemporary Books.
Eileen Gallo, PH.D. and Jon Gallo, J.D, The Financially Intelligent Parent, 8 steps to raising successful, generous, responsible children, 2005, Penguin Books.
Joline Godfrey, Raising Financially Fit Kids, 2003, Ten Speed Press.
James E. Hughes Jr., Family Wealth, Keeping it in the Family: how family members and their advisers preserve human, intellectual and financial assets for generations, 2004 Bloomberg.
Thayer Willis, Navigating the Dark Side of Wealth, A life guide for inheritors, 2005, New Concord Press.