According to the firm, written constitutions have become increasingly important for UHNW families over the last few years as a preventative measure for disagreements on asset allocations, or the direction of the family business.

The families referred to are Stonehage’s clients, of which there are just over 1,000, predominantly domiciled in Europe, Middle East and Africa but with assets all over the world. The analysis was done at the start of this year.

“The recession has put pressure on some family businesses, with many experiencing cash flow difficulties. A well drafted constitution is of immense value in such circumstances, because it defines the purpose of each of the main family assets and the decision making processes involved, before one asset can be used to help support another. It is particularly important to protect the interests of family members who are not directly involved in the business, whose voices may not otherwise be heard in the middle of the storm,” said Andrew Nolan, managing director and head of Stonehage’s family office division.

Many family businesses have experienced cash flow problems during the down turn and, with external sources of funding sometimes hard to access, the temptation to “raid” the investment portfolio is often difficult to resist, the firm said.

In addition, Stonehage views the use of a constitution as an important tool for the management of succession, and a guide to successor generations. The firm says that in these circumstances, a written constitution can be vital to resolving leadership and strategic disagreements quickly and amicably.

Stonehage works with families across a broad range of investment, business and lifestyle assets, sectors and geographies, with more than 400 staff in 14 offices around the world.