Wealth isn't always a blessing. Dr. Carl Jung, the noted Swiss psychiatrist knew that wealth could be a curse:
"You have acquired a false security, and it is this false security on which you live that causes your feelings of inferiority. One lives wrapped in cotton, protected from the cold and heat. It is not good never to be cold or hot."
John L. Levy who lives in Mill Valley, California is an expert on coping with inherited wealth. Over five years, Levy interviewed wealthy parents and those who inherited from them—"inheritors". He also interviewed their therapists. This is what Levy found.
Self-esteem is often inadequate. It's hard for inheritors to value their accomplishments. They suspect their successes are due to wealth and position. It's hard to be sure they have achieved anything, or are really liked by others. They are stung by others' resentment of their good fortune. Fear of failure runs high among inheritors, especially if their father has been a huge success.
Delayed maturity. Living in a cocoon of wealth, many inheritors are protected from life's challenges. "No pain, no gain" eludes them both intellectually and emotionally. Most overprotected children eventually do grow up, but many delay or even avoid the process.
Lack of motivation. Available wealth makes it hard to stick to goals in the face of setbacks and frustrations. Sometimes inheritors' goals are ill-defined, particularly when it comes to career. Inheritors are not driven by life's necessities. Their motivation is often short-lived and lacks intensity.
Self-discipline requires focused and sustained energy, as well as postponing gratification for ultimately higher rewards. These virtues seem incompatible with the silver spoon. Self-discipline is necessary not only for work but for significant human relationships. Lack of self-discipline is a major life-long cause of difficulty.
Boredom. If life is not very real or intense, if nothing matters that much, then boredom is bound to follow. A lack of interest in life—ennui—may lead to carelessness and irresponsibility in relationships.
Use of power. Many inheritors feel uncomfortable with the power of their wealth, since they haven't earned it and don't deserve it. They may deny or avoid their power. They may misuse it arbitrarily, running roughshod over other people—overcompensating for a sense of inadequacy and confusion. Either way, others find it hard to work for inheritors—and hard to live with them.
Guilt is rampant among the wealthy. It's hard to accept unmerited good fortune. They may be consciously apologetic or arrogantly contemptuous—which is one way of dealing with unrecognized guilt feelings. The rich want a sense of entitlement that is hard to discover.
Alienation and feelings of separation often afflict wealthy people. If born to affluence, it's hard to understand the lives and experiences of persons in ordinary financial circumstances. It's tempting to consort with peers at clubs and in other expensive activities. But there's always a sense of alienation, of being different from most people.
Suspiciousness is epidemic. Remember: "When a man of wealth meets a man of experience, the man of experience gains wealth and the man of wealth gains experience." It's hard to take human relationships at face value. "What does he or she want from me?" Suspiciousness, even paranoia are protective coverings.
Men and women face some different problems with wealth. Young men have trouble with career choices and achievements. Young women usually have more difficulty establishing credibility and competence. Says one: "Women are frequently left out of the decision-making process. Older men and brothers have traditionally been given that responsibility. It's the "Honey, don't worry your pretty little head" syndrome.
Negativity from others comes in the form of envy, anger, and resentment from those not so privileged. Many middle-income people find it hard to behave normally in the presence of the wealthy. They have a hard time feeling sympathy of any kind for the rich, who should be able to afford a constant state of bliss. Check the mass media for this public attitude.
Excessive options plague the wealthy. There are just too many choices. Few cope successfully with all the options money can buy. Having too many options can be paralyzing to one's decision-making process.
Fear of losing wealth is prevalent but seldom conscious. "What would I do if I had to support myself? Make my own way?" There may be a continuing fear of what might happen if the money disappears—the "bag-lady syndrome". "I would panic if I lost my money. I could never survive. I would die." Fear of failure plagues all of us at times. As a result, many inheritors won't face challenges because they are unsure they have what it takes to surmount them. This can be especially painful to a young person with an exceptionally successful father, and who has grown up with excessive parental expectations.
Inheritors who have succeeded on their own must battle pressures to substitute money for services. It's so much easier to write a check than to do hard work. Moreover, other people seem to want their money more than their accomplishments. This can be particularly distressing to inheritors involved in charitable work. The money they are expected to provide may obscure recognition of their personal abilities. This may produce a game where inheritors pretend they aren't wealthy but work very hard at their organizational roles, hoping that their competence will be recognized.
Inheritors may not receive good parenting. Unfortunately, many wealthy parents neglect their children. They are busy and active. They can afford servants and boarding schools. But these are only second-class surrogates; they can't provide the personal attention and caring that children want from their parents. Where parental nurture is faulty or inadequate, it's hard for children to deal with maturity and to become trusting. Rich parents may intrude excessively into the lives of their children. Their concern for the family fortune produces excessive interference in their children's lives.
It’s hard to be part of a dynasty. Parental expectations can be particularly excessive if the family has an established tradition of wealth and position. Dynastic families raise their children under considerable pressure for high achievement and general excellence, whether personally, socially, or at school. While this works well for some inheritors, it works against others. This is especially true if the same standards are applied across the board to all children, regardless of talents or aptitudes. It's also hard to establish an individual identity, rather than being seen as part of the family dynasty, particularly if the parents are well-known.
But don't give up. Here are Levy's suggestions based on encounters with wealthy families that have raised well-adjusted children free of scars, and who have contributed to the world around them.
SUGGESTIONS FOR WEALTHY PARENTS AND THEIR CHILDREN
- Carefully consider how much to leave to children, and how to leave it. All affluent parents are concerned about the corrupting effects of "too much too soon". Warren Buffet has announced that his children will receive nothing beyond good educations and an emergency fund. Many wealthy parents draw the line so that their children must work to continue their lifestyles. Caution: if this is your plan, be sure your children know what's going to happen and understand your reasons for it. Says one wealthy parent: "It's not right to bring them up on steak, and then make them switch to hamburger."
- Good child rearing is especially important for wealthy families. Good nurture requires lots of love, training, counsel, and good examples by both parents, all the way through childhood and adolescence. Parents need to be very good listeners. While there is much emphasis on "quality time", parents also need to be there for what may come up when nothing seems to be happening. Strong parenting is important for all children. Strong parenting is particularly important for children who grow up with the paradoxical problems of a lifetime of financial security and comfort. Affluent parents need to help their children through frustration and disappointments when there is great temptation to quit. Raising rich kids may be a harder job than raising kids who aren't so privileged.
- Surrogates can play significant roles. Inheritors often talk of servants who played a crucial role in their growing up. Though servants are usually on the periphery of parents' lives, they play a central role with the children. Inheritors tell of deep pain suffered when servants who had been important in their lives, suddenly disappeared or were terminated, often without explanation to the child. Wealthy parents must be very careful in the selection of servants to their children. Some inheritors reported instances of cruelty and neglect that were never noticed, or when reported were not taken seriously. Also, the ways parents treat servant’s influences children in their future relationships with employees and other non-affluent people they will encounter.Young people have relationships with "important other" adults who may become role models for them—teachers, counselors, scoutmasters, coaches, family friends. Parents may have their own relationships with these "important others" and should be careful not to disapprove just because the adult friend comes from a different socio-economic background.
- Constructive attitudes about wealth begin with parents. Parents need to be comfortable, clear, and balanced about their own wealth and free both of pride and shame about it. If parents have unresolved problems about wealth, they need to work on them in order to avoid contaminating the children. The ways parents manage money inevitably teaches their children, for better or worse.
Talking about the family wealth with children is as taboo as sex discussions in many affluent households. In children, refusal to talk about something suggests that the subject matter is dark and shameful. Treating the family fortune as taboo almost assures that children will not grow up being comfortable with their wealth. Failure to talk about money sends the message to children that they are not trusted, and this is a real blow to self-esteem. Children want to know where the money came from (and whether from Mom or Dad), how large the fortune is, and how and when they are to receive some of it.
- How to spend money is a neglected topic in many wealthy families. So also is how to handle the position that wealth makes possible. As always, parents need to lead by example, to point out how other families may be mishandling wealth, and to emphasize the social responsibilities imposed on the wealthy. ("To whom much is given, much shall be required" is a good starting point.) Levy suggests that rich children be given a regular allowance as a part of the child's right to a portion of the family fortune, not connected with doing chores, or good behavior, and not subject to being withheld as punishment. The obligation to do chores should be a condition of being in the family, rather than reimbursable services. As they grow older, real summer jobs help children learn that they could support themselves. It's best if children find their own jobs, without help from their parents.
- A sense of heritage pulls things together for inheritors. They need to feel good about where the money came from, and good about the relatives who created and managed it. They need to feel proud of admirable traditions. And if the history of family wealth is cloudy, Levy suggests candor about its origins, plus the family's clear commitment to use it in socially responsible ways.
- Choosing schools is very individual, and very important. Often the choices are not easy—public vs. private, day school vs. boarding school. Intellectual, psychological and emotional factors all play an important part. It may be wise to bring in an educational consultant. It may not be wise to insist that children go to schools that their parents attended. Above all, children themselves should be actively involved in the choosing process.
- Transmitting wealth is complex and very individual. Of course it's important to minimize taxes, promote sound investments, and protect the fortune against bad marriages. But don't overlook the tricky ethical and psychological issues. Above all, keep inheritors informed! Insist on intergenerational estate planning. Estate planning in secret is deeply resented by most inheritors, especially when they learn the details only after the death of a parent.
Start by giving potential inheritors some control during your lifetime. One common practice is to give in stages, such as 1/3 at age 25, 1/2 of the remainder at age 30, and the rest at age 35, with a provision not to turn it over to them unless they have demonstrated financial maturity in managing their own financial affairs. Resist the temptation to manipulate their behavior by promises of inheritance, no matter how tempting, and no matter how well it works. It's one thing to require a child to demonstrate financial maturity; it's quite another to force a child to forego his or her true nature just for the sake of an inheritance. Finally, be aware of the strong impulse to treat children exactly equally. Equal isn't always fair, and fair isn't always equal. Why should children who have no interest in the business be given the same number of shares as children who will devote all their working lifetimes to the company? Inflexible equality almost always backfires sooner or later.
- Career choices for inheritors are both difficult and crucial. Following father's footsteps can lead down a blind alley, especially if father has been exceptionally successful. If making more money in the family business becomes meaningless and seems not to benefit anyone, the child is heading for trouble. Sigmund Freud told us that the principal sources of self-esteem and meaning in life are love and work. Work that fulfills is critically important to inheritor's welfare. Few of us can maintain our self-esteem without working. An inheritor may be fulfilled in the arts or the humanities, or in teaching, government, politics, or even social work. Numerous inheritors have found fulfillment in careers that don't relate to money, such as the arts. (For example: Prince Charles' interest in British architecture.) Others have found it in charitable pursuits, either as a career or as an avocation. (For example: Andrew Carnegie.) Most inheritors like work situations where they are not perceived as different. Most are tempted to quit when, inevitably, the going gets rough. It may be hard for them to recognize the benefit of enduring pain, when pain can be so easily avoided.
- Successful inheritors work hard at their own personal development. Inheritors are likely to have more leisure time than most. What do they do with it? Levy suggests that life-enhancing psychotherapy is primary in personal development. Or as Will Menninger was fond of saying, "You don't have to be sick to get better!" (Recall that Levy interviewed a number of therapists to wealthy families. Undoubtedly they reinforced this view. Levy also directed the Jung Institute in San Francisco for a number of years.) Levy warns that wealthy families tend to view therapists as "servants." If so, when the going gets rough, they may resort to "firing the therapist."
Since "all of us find life more fulfilling if we have at least some sense of reality and significance beyond that which is just physical and rational", Levy further recommends that personal development should include the spiritual side, whether church-oriented, or less conventional.
- Since relationships are crucial, inheritors need friends who are not resentful or envious, and who are not out to exploit the relationship. These companions may also be wealthy, or have sufficiently full lives so that they can relate to a wealthy friend without flattery or manipulation.
- How they would function without their money is something inheritors need to know. Those inheritors least damaged by their fortunes are those who have proved to themselves that they don't need the family money to lead successful lives. To do this, they need some meaningful and successful experience at earning a living—a kind of "Outward Bound" experience. Self-confidence can only come from situations that require self-reliance.
- An attitude of stewardship can be vitally important. Levy found a striking correlation between a feeling of social responsibility and comfort and satisfaction with being affluent. Giving or investing for the benefit of society can provide a sense of meaning and purpose. Levy notes that wealthy European families (who handle wealth better than Americans) put great emphasis on the wealth's responsibilities.
- Inheritors should choose a lifestyle that fits them. If they crave a luxurious lifestyle, let them test it out. If they wish to live modestly, they can certainly afford it. What they should avoid is a lifestyle dictated by their parents, or by what others think of them. They should also be prepared for lifestyle preference to shift and change as they grow older. No matter, as long as lifestyle decisions are their own.
- Taking risks with people is a basic need. Of course suspiciousness comes with the territory. But inheritors need to risk commitment to lovers, friends, and associates. The risk of being hurt is always present. To trust another person is a primary requirement for maturity. There will be disappointments, disillusionments, pain. But the rewards are worth the risks. And risking is the only way we can know that a person can be trusted.
- Inheritors will be parents of inheritors. Levy notes how often raising their own children, frees inheritors of their own problems that accompany wealth. Inheritors find great meaning in helping their children avoid the pitfalls, and comfort in knowing that their grandchildren will also escape some of them.
"Inheriting substantial wealth is neither an unadulterated good nor a catastrophe. Problems do come with it, but an awareness of these problems...can go very far towards ameliorating them and making it possible for inheritors to live lives that are full, creative, and satisfying, and in which the money can truly enrich its recipients.
John Levy certainly provides much food for thought. He doesn't tell us how wealthy his sample families are. Is family net worth $10 million? $100 million? A billion? No matter. We have seen many of the same symptoms in affluent families who would not be considered wealthy.
We have certainly seen low self-esteem, delayed maturity, lack of motivation, and poor self-discipline. We have seen incredible boredom, improvident use of power, and lots of guilt. We have seen undue suspicion of non-affluent persons, the sting of their envy, the inclination to stay with one's own (wealthy) kind for mutual emotional protection. We have seen persons paralyzed by unlimited options, and the disabling fear of losing wealth. We have seen talented wealthy people crave notoriety for their personal accomplishments, unconnected to wealth. We have seen too much reliance on servants as surrogate parents, and unrealistic expectations of children who lack the talent.
We have seen the other side, too. We have seen parents and children drawn much closer together through full disclosures about the family fortune and the process of intergenerational estate planning. We know wealthy parents who understand there can be no parental substitute, who steadfastly refuse to hire someone to raise their children, and who are wise enough to encourage healthy relationships with adult role models who aren't necessarily wealthy themselves. We know parents who understand they must teach stewardship of wealth by example, and they do. We know parents who are very candid about the origins of their wealth, even if the history is not very presentable. We know parents who have successfully transmitted the zeal for doing business to their children—children who will succeed them gladly and successfully. We know wealthy children who have chosen fulfilling careers outside the business world. We know wealthy families who have and are teaching a high sense of stewardship over the family fortune and the position and privileges wealth affords them. We know inheritors who take the necessary risks to form deep and abiding human relationships.
Greater in number than the outright failures or the model successes, are wealthy families who teeter in between the blessings and the curses of their fortunes. They have good cause to fear the damage wealth can do, and crave to make their peace with it. For them, the first step is recognizing their problem. The second step is getting help.
Checklist on Inheritance Issues
- Do you as an heir (or do your children) seem prepared to manage wealth and to handle its responsibilities?
- Are there taboos or understandings in your family that certain questions are not asked? Certain information not divulged? If so, why so? Does your family give reasons for forbidding discussion of the family fortune? Have these reasons been communicated and discussed adequately? Are you sure?
- Do you as an inheritor (or do your children) suffer from some of the difficulties discussed in the main article? Can you identify some of these difficulties? What steps are you taking to reduce or eliminate them? Do you know where to get help if you're stuck?
- As parents (or prospective parents) of inheritors, do these pitfalls threaten the well-being of your children? What will you do to help your children avoid them?
- As to inheritance issues, are you aware of any unresolved conflicts or suspicions (possibly unexpressed) within your family? Would you really know if such conflicts or suspicions existed? If they did exist, what would you do about them?
- Does your family have clear values about the responsibilities of wealth? Is there general agreement about these values? If there is disagreement, can family members talk comfortably about their disagreements?
- As to inheritance issues, are in-laws treated the same or different from those born into the family? Does this present problems? Are daughters treated the same as sons?
- If there is conflict over inheritance in your family:
- Do the adversaries really want resolution—really want the war to end?
- Are family members reasonably confident that the situation can be improved?
- Are the "combatants" prepared to risk being candid with each other?
- Is each family member willing to allow others to express their true feelings?
- Is each family member ready to consider that he or she might be willing to change his or her mind? Or might even be mistaken or wrong about the situation?
- If the parties really want to reach a solution, then here is what Levy says they must do:
- Come together with a mutual commitment to work out your differences.
- Be candid.
- Give advance permission for all parties to be heard.
- Agree to minimize rehashing old offenses and injuries.