Each player in the party controls a character, and also the family of that character. Another player can’t have a character from your family.
When you create your character, you roll for what heirloom you get. This is typically a permanent minor magic item, like a magic sword or horn or ring. Whatever you do, your family’s reputation is affected. If you’re a charlatan, your family loses Honesty. If you’re a coward your family loses Valor.
You can stop playing your first character and play a different one from your family – of course he starts at level 1 like any other PC. This probably happens when your main character dies. The new character doesn’t necessarily get another heirloom. He would come in and introduce himself as So And So’s brother, and expect that they hand over any family heirlooms the old PC had. Smart parties will make a mutual agreement to safeguard any heirlooms for other family members, since nobody wants to lose his family stuff. Failing that, they will just end up taking heirlooms from each other and they will eventually make their way into the right hands or else get sold. Not a problem!
A PC can declare a magic item to be an heirloom. That gains his family some reputation points. He can keep the heirloom, which means there’s a chance it can be destroyed or lost, in which case the family LOSES MORE than it gained by making it an heirloom in the first place.
Heirlooms are a way to improve family reputation, but they are dangerous because they’re vulnerable.
Also, if you send heirlooms back home, not only are they safe but you can equip new PCs with them when you roll them up.
If a family member dies, the family loses points, but if there is a proper burial back home the family gets most of those points back. Low level PCs result in almost no loss if they’re buried, but high level PCs result in a high point loss even if buried.
High family points means newly rolled PCs from the family get bonuses: some starting EXP, better starting gold, the choice of family heirlooms available, retainers, etc.
So you can see how this would play out. The player whose character dies retains some benefit for his new character because his old one beefed up the family. You encourage behaviors like family ownership of heirlooms (not, “we loot everything on his body and sell it”) and funeral ceremonies. There is some automatic development of the world by the players and on their behalf. Stronghold and business development is encouraged. There are interactions between families, both NPC and PC families.
Maybe they retire a developed PC to avoid losing family points if he dies, and begin playing a different PC, trotting out the high level one for special adventures.
This doesn’t mean the PCs start out as nobles. They can be, depending on how the referee wants to run the game. But it’s fun too if everyone starts out as nobodies and they work their families upward. It also prevents the “I start as a prince and drain the family coffers and armories so I can adventure properly!” which some players try to pull. The answer is yes, you get some cool things if your family has them, but you get what the family is willing to offer. Does the Godfather let a low-level flunkie joyride around Cuba in a gold-plated sports car? Nope!
Anyway, this is just a little thing that encourages certain behaviors. If you don’t care about those behaviors, you might not see a benefit to all this family stuff.