How I Lost Millions
My great-grandfather was a self-made industrial magnate, who went from selling scrap pieces of wood off his bicycle as a teenager to a man worth some $100 million, having built a shipping company and an interstate lumber company that supplied more than half the lumber used by China and Japan prior to WWII. He clearly wanted his wealth to last for succeeding generations, and set up trusts for his heirs to carry out the vision. Ultimately, however, our family became another example of “shirtsleeves to shirtsleeves in three generations.” What went wrong? The considerable wealth in our family lasted until relatively recently. But, my grandfather’s second wife, who was a very wealthy woman in her own right, gave away virtually every penny of the family fortune—some $60 million—to charity when she died. Her reason? She “didn’t like what money was doing to the family.” She certainly had cause to be concerned, as she watched family members dabble at careers and drift into drugs and alcohol.
In their book, Preparing Heirs, Roy Williams and Vic Preisser discuss the importance of family communication in preparing children for their eventual inheritances. Leaving money, especially a lot of it, to children can be hazardous to their well-being and development, but it doesn’t have to be. Preparing and training them to handle it well is essential. We wouldn’t dream of handing over the keys of a Ferrari to a young person who hasn’t had driver’s training. But too often, people leave large sums of money to a younger generation without adequate preparation, and the results are equally damaging. In my own family, no one talked about family money values, or even what to expect when it came to inheritance. A climate of open dialog and communication would have allowed us to build trust and explore our own interests in a safe, mentored environment. Instead, more than 30 years after the deaths of our parents, my brothers and I are estranged. Surely this isn’t the result that our parents or grandparents intended for us.
Now that I understand what poorly managed wealth can do to families, I am more committed to creating a plan that will work for everyone. The process of estate planning should not be destructive. In fact, if planned correctly, this process can be something that brings a people together and strengthens relationships between loved ones.