Soon, “The Greatest Wealth Transfer in History,” will transpire, as Baby Boomers pass down $84 trillion to younger generations. Every parent wants to see their children succeed. But some may wonder whether an inheritance will help promote or hinder the future success of their children. Famous mom Gloria Vanderbilt was staunchly against trust funds for her kids. And at least one of them applauds her decision.
Vanderbilt Heiress Makes Good on “No Trust Fund” Promise
Before she died, Gloria Vanderbilt, heiress to the Vanderbilt fortune created by her great-great-grandfather, railroad and shipping tycoon Cornelius Vanderbilt, told her kids she would not leave them an inheritance. Gloria was herself the beneficiary of a trust fund worth an estimated $2.5–$5 million in 1925, or around $35–$70 million today, and had a reported net worth of around $200 million when she passed away.
But unlike her father, Reginald Vanderbilt, who squandered most of the family fortune, Gloria made more money than she inherited during her career as a fashion designer, actress, model, and artist, building a denim business that was worth an estimated $100 million.
In a 1985 interview with the New York Times, Gloria said, “I’m not knocking inherited money, but the money I’ve made has a reality to me that inherited money doesn’t have.”
Decades later her son, CNN news anchor Anderson Cooper, echoed his mother’s stance on inherited wealth. He called it a “curse” and an “initiative sucker.” Additionally, he questioned his own motivation if a “pot of gold (had been) waiting for [him].”
“We believe in working,” he told radio host Howard Stern when Stern argued that leaving your children an inheritance is a loving gesture.
Like his mother, Cooper did just fine on his own. Although she left him $1.5 million, his net worth prior to his inheritance was more than $100 million—hardly the mark of a trust fund kid.
The Case For and Against Leaving Your Kids an Inheritance
It is becoming something of a trend among the super-rich to not leave their fortunes to their kids. Mick Jagger recently revealed that he will be leaving his $500 million fortune to charity rather than to his eight children, joining the ranks of mega wealthy celebs and businesspeople like Warren Buffet, Mark Zuckerberg, and Bill Gates who have made similar vows.
Others, including famous foodie Guy Fieri, actor Jackie Chan, and composer Andrew Lloyd Webber, want their kids to work for their inheritances. Fieri’s recipe for his children’s success? The children are not allowed to take over his dining empire until they achieve postgraduate degrees.
Research suggests there is wisdom to avoiding the silver spoon scenario. The Williams Group wealth consultancy, for example, found that 70 percent of wealthy families lose their wealth by the second generation, and 90 percent lose it by the third generation. A survey by U.S. Trust found that only 42 percent of high-net-worth individuals have a high degree of confidence that the next generation is financially responsible enough to handle an inheritance.
The Vanderbilts present a compelling case study—and counterpoint—to the narrative of heirs wasting the family fortune. Despite receiving a trust from her profligate father with enough funds to live comfortably, Gloria’s inheritance did not dull her desire to achieve independent success. Cooper also had a strong work ethic. He went to Yale, interned at the CIA, and became one of the most recognizable faces in the media.
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