Parents Cut Off 'Trust Fund Junkies'

"The level of wealth has grown enormously in this country and we've seen the adverse effects," said Douglas Freeman, co-founder of IFF Advisors, a national consulting firm that works with families and foundations. "Parents have seen real examples in their families and in those around them have seen real examples of indolent, lethargic, slothful, over-indulged and under-motivated children."

In the past, the upper classes have created a generation of "trust junkies, living on streams of income. Like lottery winners, at the end they are broke and don't have a clue what to do. They treat their money like an ATM machine and it backfired."

Today, the wealthy are more inclined to find a social purpose for their wealth, rather than just preserve capital. Foundations have grown from 22,000 in 1980 to an estimated 75,000 today, according to Freeman.

"At the end of the day, parents want their kids to be productive, self-sufficient, hardworking, loving and compassionate," he said.

History also provides some positive role models for social responsibility. "Did you ever see a Rockefeller in jail?" Freeman asked.

The world's two richest men — Microsoft's Bill Gates and Berkshire Hathaway magnate Warren Buffett — have publicly said they will leave most of their billions to charity and not to their children.

According to Forbes magazine's "richest" list, Gates, 50, is worth more than $50 billion and Buffett, 76, is worth $44 billion.

Bill's Will

Gates has stipulated that each of his three children will receive only $10 million of his estate, according to press reports.

Largely bypassing his three children, Buffet gave $31 billion to the Gates Foundation in 2006, and has been quoted as saying, "Leave your children with enough money to do anything they want, but not so much that they are doomed to do nothing at all."

Nothing is inherently wrong with money, according to Lee Hausner, co-founder of IFF Advisors, who for 17 years worked as a psychologist in the Beverly Hills schools. "Money is never positive or negative — it's what you do with the money," she said.

Hausner and Freeman advise wealthy clients and major financial institutions like Goldman Sachs, CitiBank and Merrill Lynch. She said concern about inheritances is "universal."

"Parents need a strategic plan as it relates to money," she said. "There are no instruction manuals."

Experts say children are particularly vulnerable to the excesses of wealth during the "career-building years."

In Brooke Astor's day, children received large sums of money in trusts when they reached 18 or 21. Today, parents are urged to give their children money at key points in their life to encourage social and fiscal responsibility.

"For the first starter house it's OK to help with the down payment, but not the whole house, and the child can handle the mortgage payments," said Hausner. "Our goal is to get your child into adulthood relatively stable emotionally and make contributions to the world. Achievement creates a natural high. Without focus, people are not happy or satisfied."

"Brooke Astor's son probably feels entitled because he was born to the lucky sperm club," said Hausner. "They owe me this. I have a lifestyle to maintain."

Expectations of impending fortunes wreak havoc with children, according to Hausner. Parents would often would whisper to her, "We don't want our kids to know we're rich."

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