Yearly Archives: 2011

“Money in our family is affection and weapons.” Inheritors’ ambivalence about their money, Part 2

Maggie is a young woman who, like so many inheritors The Inheritance Project talked to, got her money early in life. Though she has lots of money, her parents were controlling. Mother keeps a close watch on her daughter’s credit-card statements, and Maggie often feels guilty over her spending, although it is not excessive.

“Money in our family is affection and weapons,” she says. She knows that her father married her mother for her money, and she has witnessed countless family struggles over money. Continue reading

“Ugh! More money!” Why so many inheritors are ambivalent about their wealth

It may surprise most of those who read this, but the awkward truth is that many, perhaps, most inheritors are ambivalent about the money they have inherited. It’s a love/hate relationship—often more hate than love.

One inheritor  told The Inheritance Project:

“I had inherited money ever since I can remember. I get dividends from my grandfather’s trust. They come in the mail periodically. To give you and idea of just how out to lunch I am about this, I never know when those checks are coming. And I never know what the amount will be. . . . I actually remember saying dozens of times, ‘Ugh! More money!’ Continue reading

Why donors choose anonymity

The Inheritance Project understands, from the inside out, why so many philanthropists whose wealth is inherited prefer anonymity. In our experience interviewing heirs, many told us that “being outed” was their worst fear. “The question ‘What do you do?’ always terrifies me” was a typical comment. Yet most inheritors are philanthropists, though not usually on the scale that Carol Newell (keep reading) can achieve. Some remain anonymous indefinitely, while others decide—for a variety of complex reasons—to “come out” at some point in their giving.

The following article from Toronto’s Globe and Mail (November 4) offers an interesting perspective on anonymous giving: Continue reading

Warren Buffett’s approach to inherited wealth and his own kids—a healthy example

A November 2 article about Peter Buffett in Toronto’s Globe and Mail by Sarah Hampson is well worth the read.  Billionaire Warren Buffett’s philosophy of giving money (or not!) to his own children is an inspiring example that closely matches the approach of The Inheritance Project . Excerpts from the article:

“An award-winning musician and composer, Peter Buffett, the 53-year-old second son of Warren Buffett, . . . has an unusual relationship with money and his famous surname, which he admits “can be both a blessing and a curse.” . . . He talks about making life what you want when his has clearly been made by his famous father. Despite his family’s wealth, he doesn’t consider himself rich – not with money, anyway. Continue reading

Occupy Wall Street—A Movement Whose Time Has Come

I am thrilled by the movement called Occupy Wall Street that is rapidly spreading, not only in the United States, but across the developed world. Whatever the outcome (and it could be ugly) this needed to happen. “The One Percent”, whose name comes from a 2007 documentary by Johnson & Johnson heir Jamie Johnson, refers those who, collectively, own almost all of U.S. financial resources. This is, surprisingly, a very broad range indeed: “According to IRS tax data, anybody earning $380,354 or more qualifies for membership in the top 1 percent.” (Yahoo News)

So this isn’t just about the billionaires, although there are plenty of billionaires, but about many of you who are reading this blog post. The 1 % includes those whose wealth is earned (or accumulated by investing in Wall Street) and those whose wealth is inherited. Again, almost all of their wealth comes, whether directly or indirectly (and I include myself) from Wall Street. Continue reading

A “SUDDEN MONEY” STORY — UNEXPECTED WEALTH CREATES CONFUSION

Coming into large amounts of money suddenly or unexpectedly can actually be traumatic and leads to foolish decisions. To those whose financial resources are modest it may sound like a dream come true, like winning the lottery. But more often than not, these events create so much confusion that the money is squandered.

What follows is a true story. I have changed names and left out identifying details, but the important parts of the story are exactly as they were told to me. A man I’ll call Michael  was born into a low-income family who lived in a small basement apartment. His father was capable, however, and a hard worker, and over the years the family’s fortunes grew. They moved from the basement apartment to a modest bungalow, and from there to a large, pretentious house. Continue reading

Don’t wait to order “Passing Wealth Along to Our Children” — only 10 copies remain

Serendipity happened in my life today: I have been planning to write a blog post alerting readers not to wait to order the booklet Passing Wealth Along to Our Children: Emotional Complexities of Estate Planning, from The Inheritance Project.  And lo and behold, a thoughtful and helpful article appeared in today’s Globe and Mail (Canada’s national newspaper) entitled “Baa baa black sheep, are you in the will?” The article, which I am unable to link because it is not included in the online edition, addresses the awkward issue of whether to give equal inheritances (equal both in amounts given as well as conditions). The core of the issue is whether to include “black-sheep” offspring in a will, or cut them out, or give them less, with strict conditions? There is no simple, one-size-fits-all answer to Continue reading

Children and their caregivers—race, class, and wealth in America

A few months ago I picked up my ten-year-old granddaughter after school in New York. The school (public) is surrounded by a double fence. As I approached the gate  I saw a large group of people (almost entirely women) gathered to collect the kids. The interesting thing about this group of at least sixty women was that half—if not more— were not of the same skin color as the white kids they were collecting. It was a diverse mix of Black, mixed race, Asian, South American, and so on.

My conclusion was easy to reach: the women whose skin color did not match that of the children were paid caregivers—nannies, babysitters, possibly some maids. In New York City it is especially easy to witness this phenomenon because any child under age eleven must be accompanied to and from school by a responsible adult.  Other large cities  probably have a similar, but less visible, demographic. Continue reading

Trusts, part 3: Inter vivos trusts—from The Inheritance Project

In the previous blog post I recommended inter vivos trusts, or “living trusts,” as the best option for wealthy parents (or grandparents) who want to give money to their offspring in trust.

Once again, this is not a simple subject: there are, in fact, a number of kinds of revocable trusts that may be distributed to inheritors. The two most commonly used kinds of revocable living trusts are: simple trusts and what are usually called “stepped-in trusts.” Continue reading

Back in June I wrote a blog post about my own experience with a trust fund—a rigid irrevocable trust—which was very negative for me. In several years of interviewing inheritors for The Inheritance Project I never heard of an irrevocable trust that the beneficiary found to be helpful. So let’s move on.

There are many kinds of trust funds, but the most relevant for wealthy parents and their children fall into two categories: inter vivos, or “living trusts,” and testamentary trusts. The first of these is created so that the beneficiary (or beneficiaries) receive trust income, and often also distributions of principal, during their lifetimes. Inter vivos trusts can be created to start paying out to beneficiaries at any age. Twenty-one is probably the most common age for a trust to begin to distribute to a beneficiary; some distribute as early as eighteen; and some distribute later, or in stages. What is the best age? There is no one correct answer to this question, and much depends on the beneficiaries—how mature and responsible, or immature and reckless, they are when they come into their money. There is no one-size-fits-all solution. Continue reading