Published August 11, 2014
Now I know why he calls himself “Sting.” Turns out the rich rocker’s six adult children found out the hard way, because their pop Pop ain’t leaving much of his $300 million fortune to them.
He told London’s Daily Mail they’re all ok with that. But I wonder. At least the kids should look on the bright side – they’ll have lots of “silver spoon-less” company. If the Washington Post’s Roxanne Roberts is right, a lot of the super-rich aren’t in a super giving mood when it comes to their kids.
Roberts reports Bill and Melinda Gates plan to give $10 million to each of their three children – barely a day’s interest on Mr. and Mrs. Gates’$76 billion fortune. Apparently the rest of the dough’s going to charity…actually the Bill and Melinda Gates Foundation.
That’s the same foundation another rich guy plans to dump all his dough when he leaves this enriching planet. Warren Buffett says his kids too are fine with it. He’s not leaving them high and dry, but as the Oracle of Omaha put it to Roberts, “enough money so that they would feel they could do anything, but not so much they could do nothing.”
It’s a timely question, and not just for the mega-rich. Baby Boomers are set to give away $30 trillion over the next 30 years. How they do so isn’t merely a curiosity for their heirs. This largest wealth transfer in American history could decide this country’s very economic future – especially if it isn’t all left to their kids.
The problem for Boomers is balancing helping their kids and shielding their kids. Before he died back in February of a heroine overdoes, the actor Philip Seymour Hoffman was obsessed about not wanting his offspring to be trust-fund kids. And he wrote his will before he even had kids! As it turns out, his $35 million estate went directly to his longtime girlfriend, the woman with whom he would later father two children.
It’s easy to understand why so many of the rich, and even not-so-rich, are anxious about what, if anything they pass along to their offspring. Any passing glance at today’s headlines is enough to give any loving parent pause.
Take the case of Courtney Love, who reveals this week she probably lost about $27 million in the course of her hard-rock life. She tells the Daily Mail that it’s just “rock and roll,” referring to her late husband, Kurt Cobain and the band they formed, “Nirvana.” The hits were big, and for a while the money was easy – then came the lawsuits, and personal demons, and lots of personal stuff. You know the stuff. You know the drill. You know how they drill though a lot of dollars.
Love is oddly philosophical about it all, saying she still has enough to enjoy “a comfortable life.” But hers is just the latest financial self-destruct story to no doubt give anxious parents nightmares. There are far more legendary and dramatic examples –Mike Tyson blowing a nearly $1 BILLION fortune on pricey bobbles and gifts for hangers-on, to the point today the boxer admits he has nothing left.
To be sure, there are the exceptions, but many wealthy parents aren’t convinced handing their kids a lot of money automatically brings exceptional behavior. Some even stagger their inheritance – avoiding lump-sum gifts, in favor of “staged” donations that are parceled out over the course of their beneficiary’s lifetime.
Others make them work for that money, if they get it at all. This I’ve seen for myself. A very wealthy investment banking partner friend of mine has set up a trustee to dispense some of the millions of dollars he’s leaving to his three children, based on their not blowing the money they’ve already received. When I told him this could set up needless conflict among the kids (the responsible take what the insolvent sibling wasted), he argued it was more like a loving, respectful competition. I’m not so sure…but the point was and is…nothing for free.
The fact is money doesn’t necessarily corrupt – the rich are just searching out that balance to make sure it doesn’t become corruptible. None of them wants to leave his or her offspring destitute, but neither do they want to leave them feeling un-challenged, or so entitled that they feel they needn’t be required to work.
“The last thing I want to do is breed laziness,” my rich banker friend said. “They might be a little annoyed I’m doing things this way, but I’m betting when they’re ready to kick the bucket, they’ll do the exact same thing with their kids.”
That’s because the rich in the end aren’t really all that different from you and me…they most certainly want the best for their kids. What they’re trying to teach them now is that doesn’t mean getting a pile of cash…from Pop.