The notion of shadow boards is not new, but I have in recent weeks had two virtual meetings (both with trust companies in the Channel Islands) where shadow boards have come up in the family context.

Shadow boards are usually comprised of younger individuals, and will be asked to carry out the function of a board, often in an observational or advisory capacity.

For those of us advising families on their wealth holding structures, a regular discussion point is how to begin to integrate the second or third generations (G2 and G3). Shadow boards offer a potential solution to this.

In a rapidly changing world, the importance of involving G2/G3 is increasingly recognised. For some families, the answer may lie in giving direct power to younger generation members, whether by appointing them as a director of a family investment company, or appointing them to the board of an operating business.

Alternatively, younger family members may be given power at a higher level, such as board membership on a Private Trust Company, or as a member of an offshore Foundation Council.

Other families deny younger family members direct involvement in the family business or its investments, but encourage them to be active on the family's philanthropic boards.

As an alternative method of integration, shadow boards are an increasingly interesting option. Shadow boards composed of younger employees have been used recently by companies such as Gucci, and in Gucci's case it coincided with a rise in profits.

Thus, in the family context, shadow boards could be useful committees, as well as incubators for future leaders. Whether they are given mere observer status, or more of an advisory role, is open to discussion. There is nothing to stop shadow boards being given formal powers over family trusts and companies, although that may trigger additional legal and tax considerations.

As the wealth of many families worldwide is gradually transferred in the coming years to G2 and G3, perhaps we ought to consider: should families go the same way as Gucci?