Key Takeaways

  • Kenn Ricci started his family limited partnership in 1990, five years before his first child was born in 1995, specifically to gift shares early rather than holding assets until death.
  • Traditional trusts often act as mechanisms for post-mortem control, designed by estate attorneys to let founders dictate terms to their adult children from beyond the grave.
  • Ricci ran private family financial reviews for over a decade with only his children present, deliberately barring spouses to protect open dialogue and family dynamics.
  • Hidden balance sheets signal distrust; Ricci argues that withholding net worth numbers out of fear that children will lose drive creates worse long-term failure modes.
  • To eliminate envy among siblings pursuing deals, Ricci instituted The Ricci Sibling Investment Allocation Rule.

The Ricci Sibling Investment Allocation Rule

Origination Allocation (60%)

The sibling who originates and leads an investment opportunity is entitled to allocate up to 60% of the required capital from their own funds.

Sibling Participation Offer (20% each)

The originating sibling is required to offer 20% of the deal to each of the other two siblings, though those siblings are not required to participate.

Jealousy Prevention

Siblings either participate and share in the financial upside together or formally decline, eliminating retroactive jealousy or resentment over unequal investment outcomes.

When This Works (and When It Doesn't)

This system functions best in multi-generational family governance where heirs possess different risk tolerances, capital pools, and deal-sourcing skills. Ricci recognized a common trap: if one sibling spots a winning private deal and keeps 100% of the equity, the other siblings eventually resent the wealth gap. If the originator is forced to split every deal equally, they lose the incentive to find deals. The 60-20-20 split balances deal origination reward with collective family participation.

Where this breaks down is when one sibling lacks the liquidity to fund their 20% allocation, or when siblings disagree on risk. If an aggressive sibling brings five speculative deals in a year, a conservative sibling feels pressured to deploy cash or risk being left behind. It also requires total transparency around deal mechanics. If the originator negotiates side fees, warrants, or carried interest without disclosing them to the other two siblings, the fairness collapses instantly.

It also requires strict boundaries. Ricci's family meetings included only the five direct family members, deliberately excluding spouses. As Ricci explained: “They decided in these meetings that each one of them will decide how to share financial information in their own family. That this isn't a group share. This is us five and we've been doing this for 10 years, 12 years, and it's not something we're not going to toss people into the middle of it because we don't know their personalities.”

What to Do With This

If you run an early-stage company or hold equity that could appreciate sharply, stop treating estate planning as a retirement task. Ricci set up his entity in 1990 before having children in 1995 because transferring low-basis assets early saves millions in future estate taxes and removes secrecy.

This week, write down the co-investment policy for any side project, angel check, or venture you pursue alongside family or close business partners. Draft a simple one-page term sheet that formalizes the 60-20-20 rule. State clearly: the person who brings the deal can put up 60% of the check. The remaining 40% is split equally among the partners. Set a hard 7-day window to opt in or pass in writing. Once someone declines, their claim on future upside vanishes, along with any excuse for retroactive bitterness.