Write Down What the Money Is For Before You Sign Anything

Sign a private investment commitment before your family agrees what the money must pay for, and you can end up choosing between obligations you meant to protect. A family investment policy writes down that purpose, the limits on tying up cash, who is responsible for what, and what would justify changing a decision. Write it before the next opportunity arrives, and leave room for the answer to be no new commitment.

Give the family investment policy a purpose

Begin with the life the portfolio pays for. What do you want the money to make possible, what must it keep supporting, and which plans could change? Work, care for parents or children, housing and giving belong in this conversation next to any investment interest.

Don't start with an asset class you like. An interest in venture capital or private credit says nothing about how much you can afford to leave locked up. The purpose statement has to make sense even when no deal is on the table.

Try a sentence that begins, "Our portfolio exists to support…" Then ask each person the decision affects whether it reflects their priorities. If the answers differ, write the disagreement down. A phrase like "build wealth" can hide very different expectations about spending, work and risk.

Follow the purpose with a trade-off question: what would you refuse to postpone if a distribution arrived later than hoped? Leave amounts and dates blank in the template and fill them in privately.

Use the private-market portfolio guide to place private holdings next to everything else you own. The policy should explain why an exposure belongs in that picture before anyone discusses how good the pitch sounds.

Set liquidity limits in the family investment policy

Liquidity means getting to your money when you need it. In the policy, turn that into questions about what happens when you can't. Which needs depend on ready cash? What flexibility disappears after a new commitment? Which assumptions about incoming cash are still unconfirmed?

Separate money you have from money you expect. Ask what you would do if an expected distribution didn't arrive on time. Don't let the policy rest on the optimistic answer just because the investment case is persuasive. Our guide to the private equity J-curve, modeled for one household puts a household cash calendar behind that question: note when money may be called, when you hope to receive it and which needs must be covered if it arrives late.

You can accept uncertainty in an investment and still need certainty about paying for care or a planned career change. Write down which needs come first when those collide.

Keep these questions open until you can answer them:

• Which needs must stay covered without relying on a private investment payout?
• What existing commitments must we understand before adding another?
• What changes if money stays locked up longer than we expected?
• Which assumptions about access need checking in the documents or with an adviser?
• What unanswered question would make us pause?

A label like "income" or "long term" doesn't answer any of these. Ask what it means for when cash actually reaches you. Where access is unclear, say so rather than filling the blank with the hoped-for outcome.

The limit can stay in words while the discussion develops. It might say that a proposed commitment stays undecided until you can show how protected needs would be met without counting on uncertain payouts.

Assign responsibility before asking for agreement

A policy needs someone to keep it current. Decide who maintains the record, who checks that open questions get answered and who takes part when a new commitment is on the table. Gathering information is a different job from deciding what the family will accept.

Don't assume the person most keen to invest understands everyone else's needs. Ask the people whose plans depend on the money what they need the policy to protect. Agreement should cover what happens if circumstances change while the money is locked up.

Decide how disagreement gets handled. A family member should be able to ask for more information without being treated as an obstacle. If you haven't agreed on purpose or cash limits, the policy can say that no new commitment is made until you do.

Plan for continuity. Who could find the current policy and the supporting records if the usual record-keeper were unavailable? Keep the location known to the people who need it and the financial details private.

Some questions need a lawyer, accountant or adviser. Write each one down with the name of the person who will get the answer. The template doesn't grant legal authority or change account permissions; it makes your reasoning and unfinished work visible to everyone involved.

Describe evidence that could change the decision

A persuasive investment case deserves one blunt question: what would make us change our mind? Play devil's advocate by asking why a proposed investment should be rejected, even when it feels familiar. The same habit works at a kitchen table.

Start by writing why the idea appeals. Then find the assumption carrying that appeal. Perhaps you believe it serves a family goal, fits your need for access, or adds something different from what you own. Each belief needs an explanation someone can challenge.

Ask what you'd need to learn to change that explanation. If the purpose is unclear, would a better description of the investment fix it, or is your goal itself unsettled? If access is uncertain, which document or answer would settle it? Keep open questions apart from evidence that supports going ahead.

Include what you already own. The guide to private-investment concentration helps you look for overlap with your business, your job and your property. A different investment label is a reason to check the exposure, not proof that it adds something new.

Apply the same scrutiny when the answer is to pass. Record what was missing or at odds with your purpose, so the decision can be understood later.

Don't turn the questions into a score. The policy doesn't need a total that converts uncertainty into permission. It needs a readable account of your purpose, what you considered, what's still open and why the conclusion follows.

Choose review triggers that point to changed facts

A review trigger says what would make you revisit your reasoning. Start with changes in the life the portfolio supports: work, care, housing, family responsibilities or giving. Does each change affect the purpose, the need for cash or who makes decisions?

Then look at changes in the information behind a decision. An expected distribution becomes less certain. An open question about access gets answered. You find that an investment overlaps with something you already hold. Each is a prompt to reopen the record, not an instruction to invest or sell.

Leave the scheduled review date blank for you to fill in. A regular schedule can sit alongside a rule to reopen the policy when circumstances change. The private-portfolio review guide covers the record-keeping side.

At a review, keep the earlier reasoning before writing the update. What changed, where did the new information come from, and does it change the conclusion? A policy rewritten to suit each new pitch can't explain why you made your earlier choices.

The conclusion may stay "no new commitment". It may stay undecided while a named person chases an open question. Describe that unfinished work clearly so the next discussion starts with it.

Copy a family investment policy template

The template below turns questions about purpose, liquidity and contrary evidence into a written policy. It contains no allocation, amount, date or recommendation; those are yours to supply.

For a short explanation of what the document does, see the investment policy statement glossary. Write the answers in language everyone involved understands. Where agreement or evidence is missing, leave the field blank and note the open question beside it.

Read the finished text aloud together. Does the conclusion respect the purpose and liquidity limit you wrote earlier? If the document sounds settled while the conversation isn't, change the wording to show the disagreement.

Keep the completed copy with your private records. A decision to wait is a complete conclusion when it reflects what your family agreed.

Work through those sections with the people your decisions affect.

Source notes

The goal, liquidity and contrary-case questions draw on interviews and are paraphrased; the template and review prompts are our own.