Decision rights: separating the family, the owners and the office

Decision rights in a family office are separated by assigning each decision to one of three groups, the family, the owners and the office, and by writing down which group decides, which must be consulted and which is merely informed. The tool for the first step is the three-circle model; the tool for the second is a delegation of authority matrix. Most disputes in family offices arise when a person who sits in two circles exercises the rights of one while speaking for the other.

The three circles

The three-circle model was created in 1978 by Renato Tagiuri and John Davis at Harvard Business School. As the Cambridge Family Enterprise Group describes it, the model treats a family enterprise as three overlapping groups: family, ownership and business (the operating entity, which can equally be a family office or foundation). The overlaps produce seven positions, from family members who neither own nor work in the enterprise, through non-family executives, to family owners who also work in it. A person in an overlap holds more than one role, and the model's authors note that this role confusion is a recurring source of conflict.

Applied to a family office, the circles map onto three forums. The family circle meets as a family assembly or council and decides matters of membership, values, education and philanthropy. The ownership circle meets as shareholders, partners or trust beneficiaries and decides capital structure, distributions, the appointment of the board and the sale or retention of major assets. The office circle is management, reporting to a board or directly to the owners, and decides execution within delegated limits.

Who decides what

The data suggest families already apply the distinction informally. Standard Chartered's 2025 survey of 160 family office professionals, reported by Spear's, found that family members make 77% of succession decisions and 76% of conflict resolution decisions themselves, but only 31% of investment decisions directly. Citi's 2025 Global Family Office Report found family members alone make investment decisions in 42% of offices, an investment committee in 26% and in-house professionals in the remainder. The pattern is consistent: families keep the identity decisions and delegate the technical ones.

The problem is the undocumented middle. Bank of America's 2025 Family Office Study found that more than three-quarters of 335 North American offices have principals moderately to extremely involved in operations, and that offices with highly involved principals are older and serve more family members than average. Heavy involvement is not itself a governance failure, but it means that the line between the owner deciding and the owner interfering is drawn case by case unless it is written down.

A delegation of authority matrix

Morgan Lewis's 2026 governance overview recommends a delegation of authority matrix that sets which decisions the principal keeps, which are delegated, which require committee approval and which staff can make alone. A RACI format (responsible, accountable, consulted, informed) does the same with one more distinction: it separates the person who does the work from the person who answers for it.

A = accountable (decides), R = responsible (prepares and executes), C = consulted, I = informed. Thresholds and the specific rows will differ by family; the discipline is that each row has exactly one A.

Where the lines blur

Three situations test the matrix. The first is the founder who is sole owner, chairs the family council and runs the office. In that case the matrix documents what the founder intends to happen after the roles divide, which is the succession plan in operational form; UBS's Global Family Office Report 2026 found only 35% of offices have a defined succession plan for the office itself. The second is the family member employed by the office, who is a family member in the council, an owner at the shareholders' meeting and staff in the office, and must be clear in each room which hat is on. J.P. Morgan's 2026 Global Family Office Report summary data, reported by Caproasia, show only 22% of offices have a formal employment policy, which is the document that should settle this. The third is the next-generation member brought onto a committee as an observer, which J.P. Morgan found 21% of offices do in non-voting roles; the matrix should say explicitly that observer status carries an I and not a C.

The documents that give the matrix legal force are covered in family constitution or shareholders' agreement, and the committee that occupies most of its investment rows in how to set up an investment committee. How families handle the employment row is discussed in family members working in the office.

A decision rights matrix is a page long and takes an afternoon to draft. The hard part is the conversation it forces about which decisions the principal is willing to give away, and when.