Advisory Board
A board acting in an advisory capacity to a family or family business. Typically, members are drawn from outside the family and have expertise in the areas of tax and estate planning, investment management, accounting, and tax compliance. It is the role of the advisory board to provide objective advice on managing the business and developing and implementing a succession plan.

Beneficiary
The recipient of assets dispensed through a will or trust.

Board of Directors
The role of a board of directors is to advise management on how to preserve the corporate assets for the shareholders while seeking an adequate return on investment. The board can be made up of officers and/or shareholders of the company as well as individuals who are external to the company.

Business Valuation
A formal assessment of the value of a business using pre-determined and generally agreed upon formulas. The discounted cash flow model is an example of a frequently used method.

Buy-sell Agreement
A legal document providing for the transfer of ownership of a withdrawing partner’s interest in a business. The agreement spells out the conditions under which the buyout can take place and typically specifies a pre-determined valuation method.

Community Foundation
A community foundation is a locally run public foundation that pools the charitable givings of many donors. Its mandate is to build and manage endowment funds to support charitable activities in a local area.

Contingency Plan
A plan designed to minimize disruption to a business in the case of a sudden departure of leadership due to disability or death. A contingency plan seeks to provide for interim leadership and the successful continuation of operations until a succession plan can be implemented.

Dispute Resolution Process
A mechanism for managing and resolving conflict using a process to which all parties have previously agreed.

Donor Advised Funds
A form of charitable giving whereby funds donated to a public foundation are directed to the charities of the donor’s choice. This form of directed giving provides a cost-efficient alternative to the creation of a private foundation since responsibility for the administration and management of the funds is assumed by the umbrella organization.

Employment Policy
A policy created by the family that clearly establishes the rules and expectations relating to the employment of family members. Such a policy will contain provisions regarding hiring, role definition, compensation, promotion, accountability, and termination of family employees.

Estate Freeze
An estate freeze fixes the value of the owner’s equity in the business at its fair market value so that any future growth accrues to the benefit of the children or other designated beneficiaries selected by the person implementing the freeze. In most cases, the estate owner exchanges assets, usually common stock, for fixed value preferred shares.  New common shares are then issued, usually for a nominal consideration, to the beneficiaries or to a family trust established for their benefit. Usually, the preferred shares are redeemable at the option of the holder for a price equal to the fair market value of the shares for which they were exchanged.

Fair Market Value
The price that a willing buyer pays to a willing seller when they are dealing at arm’s length in a free market.

Family Council
A family council provides an organized forum for family members to meet and discuss the current and future state of the family business. Members may, or may not, be directly involved in the day-to-day business operations. The family council is a way of building family unity and cohesiveness through a shared vision of the family’s guiding principles. These principles are sometimes given formal expression in a family mission statement.

Family Mission Statement
A family mission statement is a communal expression of a family’s values, ethics, and goals as they relate to the current and future operation of its business and the legacy it wishes to create.

Incapacity
The state in which a person is no longer able to manage his or her affairs due to a physical or mental disability.

Independent Directors
Members of a board who are neither family members nor officers of the operating business.

Mediation
A non-adversarial approach to conflict resolution by which a neutral third party (the mediator) works to facilitate the settling of a dispute between two or more parties. 

Nepotism
Showing favouritism to family members without regard to merit.

Planned Giving
Planned giving is a means of  “leaving a legacy”. The donor commits to a direct gift to a specific charity in a process that maximizes tax and other financial benefits. A gift can take the form of cash, stocks and other investment instruments, life insurance, works of art, land, or other assets, and can be made during the donor’s lifetime or upon death.

Power of Attorney for the Management of Property
A power of attorney is a document that names a person or corporation to act as a substitute decision-maker regarding an individual’s financial affairs in the event the individual becomes unable to make decisions for various reasons, including incapacity. 

Private Foundation
An organization whose sole purpose is to support charitable endeavours, primarily through the distribution of grants. Created by an individual or a group of related people, it may be structured either as a not-for-profit corporation or as a trust.  

Retirement planning
The process of setting retirement goals, estimating the income needed to meet those goals, and identifying the sources from which the necessary funds may be generated.

Shareholders’ Agreement
An agreement among shareholders that governs the current and future management of the company and sets out the rights and obligations of shareholders.

Shotgun Clause
A reciprocal provision in a shareholders’ agreement that gives an investor the right to offer his or her portion to a partner at a specified price. If the partner does not buy the offered interest at this price, the partner must then sell his or her own interest to the offering party at the same specified price.

Stewardship
The concept of managing the assets of a family business in such a way as to preserve or increase their worth for future generations.

Succession Planning
The process of deciding how and when the management, ownership and/or control of a business will be transferred to subsequent owners.

Successor Development Plan
The process of training, mentoring, and developing a successor so that he or she has the appropriate skills and knowledge to successfully run the business.