The wise inheritors guide to freedom from wealth making family wealth work for you

The Wise Inheritor’s Guide to Freedom from Wealth Making Family Wealth Work for You Charles A Lowenhaupt Copyright © 2018 by Charles A Lowenhaupt All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, except for the inclusion of brief quotations in a review, without prior permission in writing from the publisher Library of Congress Cataloging-in-Publication Data Names: Lowenhaupt, Charles A., author Title: The wise inheritor’s guide to freedom from wealth : making family wealth work for you / Charles A Lowenhaupt Description: Santa Barbara : Praeger, [2018] Identifiers: LCCN 2018015340 (print) | LCCN 2018022827 (ebook) | ISBN 9781440865534 (ebook) | ISBN 9781440865527 (hardcopy : alk paper) Subjects: LCSH: Inheritance and succession | Wealth | Parent and child | Intergenerational relations Classification: LCC HB715 (ebook) | LCC HB715 L68 2018 (print) | DDC 332.024—dc23 LC record available at https://lccn.loc.gov/2018015340 ISBN: 978-1-4408-6552-7 (print)            978-1-4408-6553-4 (ebook) 23  22  21  20  19         1  2  3  4  5 This book is also available as an eBook Praeger An Imprint of ABC-CLIO, LLC ABC-CLIO, LLC 130 Cremona Drive, P.O Box 1911 Santa Barbara, California 93116-1911 www.abc-clio.com This book is printed on acid-free paper Manufactured in the United States of America Contents Preface Acknowledgments Introduction Chapter 1        Putting Money in Its Place Chapter 2        Trusting Others Chapter 3        Family Wealth Secrets Chapter 4        Knowing Yourself Chapter 5        Saying It Directly Chapter 6        Helping Love Conquer All Chapter 7        Confronting Issues of Fairness and Equality Chapter 8        Engaging in Your Community Chapter 9        Taking the Long View Chapter 10      Chasing the Dream Conclusion Notes Index Preface In my conversations with wealth inheritors, wealth creators, and wealth professionals around the world, I have found recurring themes that arise regardless of gender, age, nationality, religion, and other factors Concerns about one’s wealth regularly lead to anxiety Questions about the purpose of wealth and how it should rule personal goals, familial relationships, and general happiness and wellbeing seem never-ending In truth, being a wealth inheritor—which can be a very distinct advantage in life—creates a variety of challenges that can be difficult to understand and deal with, none of which engender the sympathy of friends and colleagues It is difficult to discuss these challenges with most people, especially those who have not grown up in similar financial circumstances Conversations with parents, grandparents, and other family members about the unique issues faced with wealth can be even more uncomfortable and less satisfying Those parents and grandparents are most typically the initial source of the wealth and discussions that can be misconstrued as complaints may come off as a lack of gratitude for being born into a family others would be blessed to be part of Many times, these talks come to an end without any productive result So, where can a person turn for help in dealing with the challenges of inheriting wealth, and where can parents turn to help their children handle those challenges? That’s why I wrote this book—to help wealth inheritors better manage the challenges that come with the significant wealth they have now or will have in their lifetime My goal is to provide the wealth inheritor the tools and wisdom to manage the inevitable difficulties of wealth and achieve the ultimate goal: freedom from the burdens of wealth At the same time, I wanted to give the wealth inheritor’s parents and grandparents an appreciation of the struggles many wealth inheritors are facing In other words, this book is intended to give the wealth inheritor the understanding and vocabulary to address wealth challenges and the capacity to openly communicate them with understanding parents and grandparents Working through the dilemma faced by the wealth inheritor is a crucial part of his or her growing up Although volumes have been written about how to “manage wealth” and how to “create family harmony in multigenerational wealth,” little is written directly for the wealth inheritor The wealth industry is fed by revenue paid by wealth owners Too often, the purpose of “next generation education” is the transmission of values and standards encouraged by the older generation As a third generation financial advisor, I, along with my family, have observed and helped wealth creators and inheritors for over 100 years In that time, we have seen many complex personal and family issues arise and, more often than not, we have seen wealth lead to unhappiness, misery, family dysfunction, and addiction Nobody believes that wealth should be poison, but few people actually have the knowledge and experience to figure out the purpose of wealth and set it on its course In my first book, Freedom from Wealth , I presented the thesis that self-actualization should be the true goal for anyone, with or without wealth I explained that wealthy individuals must start their life journey of finding harmony with wealth by figuring out what the wealth is for I then examined the various elements of “wealth management”—from investment process to governance, analytics to philanthropy, and from socially responsive investing to “next generation” education My goal was, and remains, to help individuals and families understand what wealth is intended to and ensure that wealth is always kept in its place Wealth should never consume or imprison the wealth holder If you want to test where you are—in or out of that prison—you might start by asking yourself these questions: Do you feel that you have your wealth under control? Is your wealth a source of happiness or anxiety? Is your wealth supporting your personal goals and helping you become the person you have always aspired to be? Are you and your family closer or further apart due to your wealth? Do you sometimes wish you didn’t have your wealth? As I have traveled around the world speaking about freedom from wealth, it’s clear that many wealth creators and inheritors have not achieved a state of balance and self-actualization Some recognize their unhappiness but don’t know what to about it Others claim that they will start to chase their dreams, but if these are older generation folks, it may be hard for them to learn new tricks Those who come to me with the most enthusiasm about freedom from wealth, however, are generally younger wealthy people Some of them are creating wealth and are aligning their lifestyle and attitudes to reach their goals Others are wealth inheritors or children of wealth waiting for the inheritance Many are struggling with individuality and freedom and feel enslaved by their circumstances These wealth inheritors find themselves restrained in a number of ways They find it hard to understand how money and life intersect They have difficulty trusting others They often feel overwhelmed by the family’s wealth and its mysteries and their own lack of self-awareness They have difficulty “fitting into” family and community They need help taking the long view, figuring out their goals in life and then marshaling wealth in order to chase their dreams As I meet with wealth inheritors, I often hear deep unhappiness I have spent time listening to impassioned pleas from wealth inheritors and their anguished descriptions of their situations I have heard tearful complaints about the pain their family is causing or the stifling control over their lives that is destroying their quality of life Many complain that money is the problem, not the facilitator of ambition and dreams that most people would assume The visits are poignant and emotional These inheritors may have wealth and health, but they are desperate for happiness and self-actualization I have written this book for those of you trying to live life to its fullest with a wealth inheritance in hand or on its way I want to share the wisdom I have been able to glean from knowing many people like you—in youth and in old age—as I’ve watched some families allow children to prosper and others keep them from becoming what they want I know how difficult parents and legacy can be, but I also know that a wealth inheritor able to recognize challenges and meet them, often alone, can soar and live a life fully satisfied Acknowledgments Whatever wisdom I have found and shared to help inheritors gain freedom from wealth comes from experience, observation, patience, and, most important, the examples, teaching, support, and collaboration of others Although it would be impossible to list all the people who have served as models, teachers, supporters, and collaborators, let me mention a few Abraham Lowenhaupt, my grandfather, and Henry Lowenhaupt, my father, opened the road to my experience Each in his way supported and taught me, my grandfather through his writing and my father through our partnership over many years Both introduced me to ways of thinking and observing and counseling that I draw on daily My partners at Lowenhaupt Global Advisors and Lowenhaupt & Chasnoff have been truly supportive and great collaborators in helping our clients become all they can become Our clients have willingly opened their hearts and minds, trusting us to help them overcome obstacles to their becoming all they can become Many great minds have helped me develop my own worldview Their inspiration and influence enrich my perspective each day and have informed and animated this book Most are quoted in this volume, but others might include Michael Hutchinson, Tim Barron, Lee Thistlethwaite, Robert McCuaig, and Charlotte Beyer Ideas and advice are worthless without clear articulation and publication I have been extremely fortunate to have the assistance of Greg Berardi over many years and through many thoughts; Zach Gajewski, who has served as my editorial advisor for both of my books; my wife, Rosalyn, who has read the manuscript carefully and made fine suggestions; and Maryann Karinch, who helped place the book, and the excellent team at Praeger Whenever I write about family, I count myself particularly blessed by my own: my parents, my wife, my daughters, their husbands, and their children You will find places in the book where I mention their teaching and my experiences with them Their support and love give me the freedom to experience, observe, strive for patience, and learn from others Introduction Some 20 years ago, I moderated one of the first sessions for wealth inheritors offered by a preeminent global membership network for families of substantial wealth The group offers programs, advice, and educational services in a private, collaborative setting, to help people of all ages understand, wisely invest, and build a healthy relationship with their wealth Fifteen people between the ages of 21 and 30 attended the event They were given the task of choosing a topic of conversation related to wealth inheritance, and then I was to lead and guide the discussion Although I’d given many talks and led countless discussions in my then 25 years as a wealth advisor to ultrahigh net worth families around the globe, what happened in that room gave me new insights into the challenges faced by wealth inheritors The experiences of these 15 people taught me that growing up with wealth is not easy I looked to one young man to get the ball rolling, and, without hesitation, he said, “It is much harder to grow up rich than poor.” I bit my tongue and decided to let that comment roll for a while The theme went around the room One person after the other talked about the difficulties he had had growing up with wealth Here are a few of the comments I heard that day: “I had a friend from school to my house to spend the night He arrived and saw the size of my house, all the rooms we had, and our maids, and his eyes widened From that day on, I knew that the only reason he wanted to be my friend was that he thought it was neat our family had so much money.” “My grandfather lived with us and had a chauffeur and a Rolls-Royce Whenever my friends came over, I was embarrassed because we had so much money So I really never invited anyone to my house That made it easier.” “I wanted to sign up for a soccer team with some of my friends from school The club met on Saturday morning and my father told me that our bank was going to have classes for me and others in how to manage money I was only 14 and didn’t really care about managing money, but my father told me learning how to manage my money was more important than playing soccer.” “My parents put me through this charade of pretending we were poor When I was 10 or 11, I had to get a $10 weekly allowance and had to budget how to spend it and how much to give to charity My parents told me I had to be frugal and try to save for college Meanwhile, they had their own private plane and we had a household staff of five or six My father had a chauffeur take him to Wall Street every day It all seemed like nonsense to me as I knew we were what the world called ‘rich.’ ” “My parents had so much money that they traveled all the time and never stayed home with my sister and me Flying here and there and the next place on their own plane, we were cared for by nannies and others What kind of home life was that?” “ ‘You will always have whatever you need or want,’ said my grandfather to me when I was 15 ‘Someday, all of the money I have earned will be yours and all you have to is keep it well invested and not lose it to the crooks out there always looking for rich people to bilk.’ When I told him I wanted to go to engineering school and become a computer engineer, he told me: ‘No need! You will go to Princeton as I did and you can hire other people to fix your computer.’ He never understood.” After a half hour of hearing their complaints and their unhappiness, I asked whether a person from a lower-income background would understand that growing up “rich” is more difficult than growing up “poor.” “Maybe not,” said one, “but they would never understand.” We discussed the idea without conclusion, but I saw an obvious pattern emerging Those 15 confirmed everything most adults suspect about young people: Adolescents can be tremendously unhappy, and when they are, they look to someone to blame Who else to denounce besides their parents? More importantly, they confirmed a fundamental truth I had not completely understood before that session Although most every young person, regardless of their socioeconomic background, has experienced similar feelings toward their parents or upbringing, the difference for those who have grown up in a seeming “lap of luxury” is that they face a serious issue that many people aren’t willing to talk about: they are trapped by the burdens of wealth Growing up in families of $100 million or $250 million or $500 million or more presents for many this fundamental issue: How can a wealth inheritor lead a life unencumbered by the burdens of family wealth? How can individuals achieve self-actualization and a feeling of fulfillment? In other words, how can they grow up to become fully realized individuals, seeing their wealth not as an impediment, nor a crutch, but as something that might help them succeed? It was clear that the young people in that room were raised by parents and grandparents whose wealth was the defining character of their personal identities As they grew up, those young people lived in the shadow of their parents and their parents’ wealth When looking for the reason for adolescent unhappiness, they pointed to their wealth They lacked the perspective that can come with independence over time They needed experience they could only gain as productive people making their own way through the world with direction and freedom When we’re young, perspective is often absent When I was teaching English at an elite Eastern boarding school, many years ago, I tutored the teenaged son of a wealthy and prominent name in all the social circles He was a likeable boy, but very lazy I spent hours trying to teach him how to write with proper punctuation and grammar One day, in frustration, I said: “You just have to learn how to write; you cannot grow up without that ability!” “Mr Lowenhaupt,” he replied, “You and I both know that all I have to know how to write is my name on a check.” That stopped me in my tracks A successful life is much more than simply signing checks, a fact that young man learned over time as he became a Phi Beta graduate of a good college and went on to a successful career, entirely on his own As stated in a March 6, 2015, article for Reuters, “Baby boomers will leave more than an estimated $30 trillion to younger generations over the next 30 years.”1 With such a large amount of money comes an even larger amount of responsibility, but “wealth alone” should not define a person’s life (even if it defines the life of one’s parent) If you grow up with wealth, if you are a wealth inheritor, if you are one of those inheriting a piece of that $30 trillion, how you get on with life? So how you chase the American Dream or the Chinese, Indian, or Australian Dream, the dream of the human soul to become all you can be? You start by figuring out what that wealth is for; you consider that you want to live in a world of peace, beauty, and health; you consider community To succeed and become one’s true self, it’s imperative to create a healthy relationship with wealth at a young age and continue that relationship until it’s time to pass that wealth, and knowledge, onto the next generation At the heart of the many challenges wealth inheritors face is the ability to take control of their own lives Control always requires two sides: the person exercising control and the person being controlled Many times, this struggle exists between parents and their children In this book, you will find many stories of people who break that dynamic in one way or another, but one that I want to share with you at the outset is that of an only child who was born into the wealthiest family in Malaysia His father used family wealth to try to control his son’s actions and decisions, leaving the son miserable and unfulfilled When he was in his early twenties, however, the son found a higher calling, joined a Buddhist monastery, and took a vow of poverty This, of course, infuriated the father, but gave the son independence that led to happiness and contentment Unless you can develop such independence, you will never experience true freedom In the chapters that follow, I identify 10 specific challenges facing young, wealthy people today I draw on the experience and wisdom of the more than a century that my family has been working for wealth creators and inheritors, explore some of the solutions to the issues wealth inheritors face, and discover the many opportunities they have to lead inspired lives of self-actualization and freedom When you finish this book, I hope you will be motivated to pursue a life of self-actualization with freedom from wealth, and you will be committed to helping your children and grandchildren chase their dreams Whether you are an inheritor of wealth or the parent of an inheritor, I hope you will have the wisdom and capabilities to have a healthy relationship with your wealth and your family I am here to help you Now, let’s begin! upon it again With the strategy’s lengthy and deliberate creation, its “family council,” its “roles and responsibilities,” and its various entities, the entire process may take an inordinate amount of time and effort It is also onerous, as one large family encountered over two years with an advisor who specialized in family charters At the end of two years, a document was signed and various committees were established The result: over 20 “next generation” family members were completely frustrated and unhappy They all wound up not really getting along with one another, either In truth, the 20 participants on the family council felt they had wasted lots of time They told me they finally signed the “damned document just to get it over with.” They went to their meetings and looked for any excuse to end them early The whole infrastructure was interfering with their lives and became intolerable The family was headed toward total dysfunction as a group and individually, all on account of a well-intentioned prison that was constructed for them We helped them discard the whole apparatus We then designated one family member, who was actually passionate about family financial matters, to build a family office that would be run professionally Eventually, that person returned to running the family business Meanwhile, the rest of the family resumed their lives as teachers, artists, lawyers, and husbands and wives They all felt free to concentrate on what was most important to them The story of this family’s escape from the prison of a family charter calls to mind another story I have retold again and again because it is so illustrative of the problems wealth creators face in chasing their dreams While attending a family wealth conference where I was to give a talk on the concept of freedom from wealth, I sat next to a woman from an old and wealthy family at lunch I had not met her before and asked her what she did for a living It turned out she was an artist, and a very fine one I asked her why she was at the conference She explained that her family office was trying to decide whether or not to buy hedge funds, and they had put her on the committee to decide that I asked her whether she was interested in hedge funds, and she said not particularly She asked me why I was at the conference and I told her “I’m here to talk about freedom from wealth.” She thought the topic sounded interesting, so I suggested she attend my session after lunch at 2:00 p.m She said she could not because she was attending the hedge fund class scheduled for the same time Five minutes into my presentation that afternoon, she entered through the back door and joined the audience Afterward, I asked her what happened to the hedge fund session and she said, “I sat there thinking about the idea of freedom from wealth—‘freedom from wealth’ kept running through my mind —and how bored I was listening to hedge fund talk ‘Damn it,’ I said to myself I am an artist I can hire other people to decide whether the family should buy hedge funds So I came to hear you.” Over and over, the idea of freedom from wealth resonates with young inheritors because the culture of stewardship stifles their independence and capacity to live life free from the burdens of wealth The American Dream is the freedom to pursue self-actualization The culture of stewardship is a strong one, and it takes strong will to shed it Charlotte Beyer, one of the wise observers of family wealth, says that she and I are the “lone voices” on the concept that stewardship may not be a blessed role See her discussion of this in her book, Wealth Management Unwrapped.2 Becoming a “family wealth steward” is not a road to freedom; instead the family wealth steward is enslaved in the infrastructure of family wealth The culture of stewardship takes away that freedom to pursue self-actualization and leaves a person incapable of becoming all he or she can become (If you need a primer on how to achieve this freedom, please read my earlier book, Freedom from Wealth.) The Journey: Pursuing Your Passion Even if you believe you have achieved freedom from wealth, you may still face other obstacles Once again, your parents may represent an obstruction to the journey you yearn to take along the road to your dream Your parents may well have chased their own dreams that resulted in great wealth They may have built a business based on a vision of the world or its needs These dreams are romantic when they are being chased, and they can become the basis for a great family legacy Over the past 50 years, for example, visions of globalism have led to many great companies Consider how telecommunications has created huge wealth worldwide Everywhere I go, I hear stories of visionaries who rode globalism and communication to great wealth In the early 20th century, an adventurous man took a journey on a steamer from his home in Sydney to New York and asked writers in Tin Pan Alley for the rights to sell their music in the South Pacific They easily granted it Another wealth creator in the middle of the 19th century saw opportunities offered by communication, overnight transportation, and the growth of science worldwide to start a chemical company offering overnight delivery to laboratories anywhere in the world These were all grand dreams and visions The pursuit of those dreams was as much about the thrill of making the vision a reality as it was about getting rich So like these wealth creators, your parents may have had a vision that turned into great wealth And your parents, like many, may then define the dream as having money, rather than building on the initial vision If you receive money, and money becomes the dream, you are handed the dream on a silver platter and you have nothing to chase The story of an architect-turned-Catholic-monk perfectly reflects what happens when there is no dream to chase The young architect said he had one goal in life—to receive an offer from a certain prominent New York architectural firm He was teaching at MIT and just reaching what he thought of as young-middle-age when the call came It was an offer from that firm, the one he’d dreamed about for so many years My friend said his first reaction was great joy But his second was the terrifying realization that he was still relatively young and had achieved his life goal Where was he to go next? What was to be his journey? “I had a choice of killing myself or joining a monastery,” he joked “And since I hated the sight of blood, I joined the monastery.” That monk, who had grown up in wealth, got to chase his dream, but found that when he “caught” it, there was no more journey and life became uninteresting When your parents define the “dream” as “having” rather than “chasing,” when the dream is money and it is handed to you, you are deprived of the journey The dream is going there, not “being” there And “where” you are going needs to be a state of mind, passionately pursuing self-actualization You need to define the dream appropriately and you need to recognize that your parents’ definition of it may be different from yours I have repeatedly said that the pursuit should be passionate, but we should consider the difficulties that word presents Often, parents interpret that to mean that their children must have passions Parents will ask me how to make a child have passion Others say, “My children have too many passions—they are all over the place.” Finding one’s passion is not an easy process It may come when you least expect it; it may be in you for years before you recognize it It may be nonspecific—that is, you may feel passionate generally, but have trouble associating it with any specific goal The more you try intellectually to figure it out, the harder it may be A parent telling you that “it is time for you to find a passion” is not going to help You may become like the centipede consciously trying to figure out what leg follows what and falling into a ditch in exhaustion I find the adverb “passionately” more appropriate than the adjective “passionate” when I talk to wealth inheritors and their parents You will find that there is something intuitive about doing something passionately, and you need to trust your own intuition It is about the way you engage rather than the subject of your engagement Are you fully engaged and are you having fun? If both can be answered positively, then you are on the right track—you are “passionately” pursuing something When wealth inheritors are not passionately engaged, their parents often exhort them to “find a passion.” A woman confided in me that she was worried about her daughter “I can’t convince her to have a passion,” she told me Her daughter had a job in an investment bank, but she just couldn’t seem to enjoy it, even though she worked hard and had lots of money That daughter didn’t really need money, though—she was rich already Her mother was happy she had a career, but that career was not making her daughter happy Telling her to find a “passion” didn’t it; unhappiness did One day, she quit the investment bank and became a volunteer in an orphanage She was enthusiastic and pursued that work passionately, finding it fulfilling at every level The “passion” was helping others, but she did not start by looking for a passion She started by looking for happiness A chef I met in Asia had a similar experience Only 24 years old, he had gone to school in Europe and become a chef He worked long hours in a resort restaurant on a distant island “This is my career,” he said “I like it well enough because I have trained for it, and it is good for me But on weekends, I go to a little village and cook food for the orphans.” As he said that, his face lit up He told me about the weekend the hotel restaurant was closed, and he took his whole staff to the village to cook for these children “I loved helping those children and using food to it.” He was clearly doing that “passionately”—it showed in his eyes and one heard it in his voice He will likely finish his term as a chef and devote his life to helping the less fortunate Neither the investment banker nor the chef had found a particular passion before they began their “careers”—their passionate pursuits came later and suddenly Neither would have succeeded in “feeling” this passion if he had searched just because a parent had told him to go out and find passion So keep your mind open and let it hit you All of a sudden, you will find yourself doing something fun Whenever you aren’t, accept the risk of trying something different If one pursuit doesn’t it, try another If you are young enough that your parents are telling you to go find a “passion,” you are young enough to try different pursuits, many times over Prerequisite: Financial Security If you have attained your freedom from wealth and are ready to travel the road toward selfactualization, you still have two obstacles: financial security and optimism Professor Rank’s analysis mentioned at the beginning of this chapter is thorough and persuasive For many parents, however, it is not intuitive Rank’s conclusions are based on extensive data and analysis He notes that when a person feels financially insecure—after losing a job, facing economic volatility, or fearing the lack of a steady income—that person cannot pursue self-actualization and chase the dream Many wealthy parents are convinced that they can motivate their children by depriving them of financial security That may motivate the children to get a job, and possibly keep it, but passionately pursuing self-actualization cannot be “motivated.” It needs to be “nurtured.” Taking money away or providing it from time to time, possibly arbitrarily, may encourage independence, which is fine Rank’s studies, however, prove such actions will not encourage self-actualization There’s a possible caveat worth noting If a person’s self-actualization is creating great wealth, “motivation” to work may result in self-actualization But “passionately” making great wealth is not for everyone It is more likely to be a by-product of some other vision, an important idea, or unique goal The story of Evan Spiegel, founder of Snap Inc., the phenomenally successful social media company, illustrates that financial security does not hurt At age 23, Spiegel turned down an offer to sell his company for $3 billion to Facebook Spiegel was raised with wealth Indeed, to the casual observer he was “spoiled” in all regards: He had any number of cars growing up and typically received anything his heart desired He was not motivated by financial insecurity We might even assume he was nurtured in financial security To me, it seems that he did not sell because he could not imagine what good the cash would be, when the business itself gave him the opportunity to pursue his vision Here is what he said at a talk at Stanford in the very year he turned down the offer, describing an entrepreneur as an “individual who is able to combine—gracefully and authentically—their life and their work An individual who has identified a dream far greater than accumulation of wealth, but a dream that is achieved through participation in consumer society and the creation of a company.” He wasn’t motivated by a lack of money, nor did having money motivate him Along the way someone must have realized that his passion should be nurtured You and your parents need to recognize that you need financial security Often, though, a parent asks whether that means giving children everything they want The key question is: “How shall we define financial security?” That definition might be different for a parent than for a child The parent can define it one way and the child another For a parent, giving children financial security means giving them enough money to lead life as you raised them A friend with vast wealth fundamentally preferred to lead life simply He and his wife lived in a modest house and raised their children with inexpensive vacations, cars, and clothes They didn’t belong to a country club And their children went to public schools Financial security for their children did not require great wealth They gave away much of the wealth they inherited from their father to charity Today, they lead lives that are not terribly expensive, and they are happy with their lifestyles If you raise children in luxury, with private jets, exotic vacations, private schools, and polo, that’s still just fine Recognize, however, that to have financial security, your children will need greater wealth to maintain that lifestyle For wealth inheritors, it’s important to define financial security on your own terms, so you can still chase your dream—with or without your parents’ money If your parents don’t want to give you the vast sums you may require to live as you were raised, your job is to reconsider what you need to feel financial security Keep in mind the surfer who wandered the beaches of Indonesia He had financial security because his lifestyle did not require much money at all Plenty of other people can live with little themselves In a Benedictine monastery, there can be dozens of monks with no money whatsoever Yet, through their monastery, they have financial security and are perfectly free to become all they want to become The Buddhist monk in Malaysia who so frustrated his father found financial security in the alms he received begging Define this financial security for yourself See whether you can lead a life in which you feel financially secure and can still passionately pursue your dream Start by letting your parents know what you need for financial security and why If they not agree to your needs or decide to make you better by depriving you of financial security, find it yourself You can push your parents or you can push yourself (or possibly a little bit of each) Prerequisite: Optimism Even with financial security, you still need optimism For the Irish cop my grandfather knew at the turn of the last century, that optimism was the belief that his son could one day become a lawyer For the Jewish cobbler my grandfather knew, it was the belief that his son could become a doctor For you, lots of money and a good education are great, but in a world filled with war, pestilence, and chaos, where will your optimism come from? If you are in the richest percent, where is the optimism in thinking your children will fall to the middle class (if there is one left) or live in a world of environmental desolation and poverty? If your money has any purpose, one of them—what your wealth is for—is to live in a world of peace, beauty, health, and fairness You that by helping your community and doing what you can to make the world a better place There are similar lessons to be learned in the inspired work of Eric Greitens, a Rhodes Scholar who became a Navy Seal with military honors and went on to become the Governor of the state of Missouri When he returned from service, he found many of his fellow veterans leading lives of desperation, unhappiness, drug addiction, and misery He asked himself why that was and how to help them He began an intensive study in the classics, religious writing, philosophy, and psychology Here is what Greitens found: A soldier wakes up every morning to a mission, which is totally absorbing, and it takes his entire effort to pursue it The soldier is on a journey with a clear purpose When the soldier leaves the military, that soldier is deprived of that clear mission and often loses purpose Those who have successfully returned from battle, no matter the era or culture, are those who become civic and find the mission in helping their community Based on his conclusions, Greitens started a charity called The Mission Continues, which gives grants to returning soldiers to perform community service That program, quite successful in its fundraising, has helped many veterans by connecting them to community Through engagement in their communities, those veterans regain their optimism about life They have a new mission rooted in community, and it gives them purpose again Many wealth inheritors are without a mission Particularly if their parents try to hand them the “dream,” inheritors may be looking for the journey, just as the returning veterans are looking for the mission—purpose in life As a wealth inheritor, perhaps you and your children won’t have more money or a higher standing of living than your parents, but together you can all see the real good that comes from your efforts in any community Optimism flows from this renewed sense of purpose and mission and the realization that you can help make the world a better place By helping others in your community (ultimately helping them chase their dreams), you tap a wellspring of optimism in yourself and possibly others For example, teaching disadvantaged children and seeing them go to college is not only satisfying, but also shows that you can make a difference The family’s volunteerism in the children’s hospital, discussed in Chapter 8, made a difference to patients and families who needed support That surfer’s journey, also in Chapter 8, was not to riches and glory but to helping a community What you can for your community will be very powerful in giving you the strength and support of optimism Find a way to take advantage of it as you start your journey A clear mission will allow you to chase the dream Conclusion Although we live in a time when it may seem harder than ever to achieve the American Dream, it is as important as ever for you to chase that dream It doesn’t matter whether you are a wealth inheritor, whether you are American, French, Chinese, Indian, or Brazilian You must meet the challenge of finding the freedom to passionately become all that you can be It might not be easy along the way You’ll experience obstacles at almost every turn as you define financial security, find optimism, and gain freedom from wealth However, once you are chasing that dream, you will have met that ultimate challenge of inherited wealth The first step, though, is to embrace the concept of achieving your freedom from wealth You must understand your own personal relationship with wealth and how it affects the decisions you make Your family may provide input, and you’ll find that some of this will be helpful—some less so But at the end of the day, you are the only one who can achieve freedom from wealth for yourself The dream is the freedom to passionately pursue what you want for yourself, reaching selfactualization, and understanding yourself and your goals It’s the only way to attain success and satisfaction Financial security and optimism are of course important, but without getting out into the world, experiencing exciting new things, and finding out who you are, you’ll relegate yourself to a life of mediocrity Remember, achieving success, attaining your dream, is a journey, not a destination It may take you years to figure out your true passions, but you must stick with it Get on the road and start today! Conclusion The ultimate challenge for the wealth inheritor today is simple to articulate, although difficult to overcome: Creating a life with the freedom to passionately pursue self-actualization Chasing this dream, to become all you can as an individual, will prove to be a lifelong journey, one in which you will encounter many impediments along the way In the preceding chapters, I addressed the challenges that prevent you from achieving freedom from wealth and chasing your dream, but there will certainly be others As you seek to fully self-actualize, remember it is the journey and not the destination that ultimately matters You need to take the long view on your journey, and developing that view requires some effort That means creating long-term goals for your investments, your accomplishments, and the good you can for your community Too close a destination will leave you arriving without the capacity to continue to pursue Chasing the dream, whether American, Chinese, or otherwise, is in fact the dream of the human soul to be all it can be Overcoming these challenges laid out in this book will help you realize that dream These challenges can apply to almost anyone, but they may seem harder (not necessarily easier) for a person inheriting wealth It may not be harder to grow up with than without wealth, but it is certainly not easier Nevertheless, the challenges can be met, and often are, by wealth inheritors, and the world is full of examples of those who gain freedom from wealth by passionately chasing their dreams I hope after reading this book, you, too, will begin your journey toward becoming one of them Notes Introduction Elizabeth Dilts, “Inheritance Prep for Wealthy Kids Seen as Niche Market,” Reuters, https://www.reuters.com/article/us-wealth-children/inheritance-prep-for-wealthy-kids-seen-as-niche-marketidUSKBN0M21C420150306 March 6, 2015, Chapter One Geordie Greig, “Why My Children Will Not Be Inheriting My £180 Million Fortune,” Daily Mail UK, June 21, 2014, http://www.dailymail.co.uk/home/event/article-2662557/Sting-I-earned-money-hard-work-You-try-singing-two-hours-getting-planeday.html Richard I Kirkland Jr., “Should You Leave It All to the Children?” Fortune, September 29, 1986, http://archive.fortune.com/magazines/fortune/fortune_archive/1986/09/29/68098/index.htm John O’Leary, On Fire: The Choices to Ignite a Radically Inspired Life (New York: North Star Way, 2016) Chapter Two Lord Alfred Tennyson, In Memoriam (London: Edward Moxon, 1850) Chapter Three Charles Lowenhaupt and Don Trone, Freedom from Wealth: The Experience and Strategies to Help Protect and Grow Private Wealth (New York: McGraw-Hill Education, 2011) Chapter Nine “The Nagle Journal: A Diary of the Life of Jacob Nagle, Sailor, from the Year 1775 to 1841,” Kirkus Reviews, https://www.kirkusreviews.com/book-reviews/john-c-ed-dann/the-nagle-journal-a-diary-of-the-life-of-jacob- Marcus Tullius Cicero, Cicero, In Twenty-Eight Volumes , trans William Armistead Falconer (Cambridge, MA: Harvard University Press, 1923), vol 20, 33 Chapter Ten Mark Robert Rank with Thomas A Hirschl and Kirk A Foster, Chasing the American Dream: Understanding What Shapes Our Fortunes (New York: Oxford University Press, 2014) Charlotte B Beyer, Wealth Management Unwrapped, Revised and Expanded: Unwrap What You Need to Know and Enjoy the Present (Hoboken, NJ: John Wiley & Son, 2017) Jennifer Van Grove, “Snapchat’s Evan Spiegel: Saying No to $3B and Feeling Lucky,” CNet.com, November 26, 2013, https://www.cnet.com/news/snapchats-evan-spiegel-saying-no-to-3b-and-feeling-lucky Eric Greitens, Resilience: Hard-Won Wisdom for Living a Better Life (New York: Mariner, 2016) Index Accidental wealth holders, 3, 5–6 Accountants, 23 Addiction to wealth, 13 Adversity, 15–16 Air travel, 31–32 Alcoholic-lawyer story, 23–24 American Dream: defined, 132; freedom to pursue self-actualization, 134; goal, 133 Antenuptial (prenuptial) agreement, 21–22, 75–76, 77–79 Architect-turned-Catholic-monk story, 135–136 Arranged marriage, 80–81 Asian-patriarch story, 67–68 Author’s-family’s-experience-with-farmland story, 115–116 Benedictine monks, 13, 139 Beyer, Charlotte, 134 Bias, 29 Buffett, Warren, 8, 28 “Burden of significant wealth,” Carnegie, Andrew, 106, 107 Cato Maior de Senectute (Cicero), 124 Character, 15, 16 Chasing the American Dream: Understanding What Shapes Our Fortunes (Rank et al.), 132, 146 n.1 Chasing the dream, 131–141; architect-turned-Catholic-monk story, 135–136; chef’s-true-passion story, 137; family charter strategy, 133–134; family wealth stewardship, 134–135; financial security, 137–139; freedom from wealth, 133, 134; investment-banker’s-truepassion story, 136–137; mission, 139–140; optimism, 139–140; pursuing your passion, 135–137 See also American Dream Chef-sous chef story, 32 Chef’s-true-passion story, 137 China: “duty,” 108; probate law, 98 Chinese-family-with-four-children story, 63–64 Cicero, Marcus Tullius, 124 Clear expectations, 97 “Cloak” of trust, 23–25 “Clubs,” 28 Community engagement See Engaging in your community Contrarians, 28 Couple-afraid-to-tell-parents-about-marriage story, 81 Cross-cultural marriage, 89–91 Cultural and jurisdictional differences, 89–91 Culturally appropriate investing, 111 Culture of stewardship, 134, 135 Cultured-upbringing story, 39–40 Dann, John, 117 “Dead hand” trust, 42, 129 Dentist-who-opened-pawn-shop story, 59–60 Depression, 15 Direct language, 70–72 See also Saying it directly Disciplined process, 31 Distrust, 32 See also Trusting others Diversification, 58 Divorce, 83–85 Doctors, 23 Dollar-for-dollar equality, 96 Dreams and visions See Chasing the dream Due diligence, 28, 30, 100 Elephant wedding, 79–80 Eleven-children-without-entrepreneurial-spirit story, 58–59 Engaging in your community, 103–113; Chinese view of “duty,” 108; culturally appropriate investing, 111; family foundation, 109–112; five ways that philanthropy “helps,” 106–107; index funds, 109, 111; investment strategies, 109–112; optimism, 107; philanthropy and charity are not one-sided, 113; socially responsible investments, 110–111; strategic philanthropy, 104–106; surfer-philanthropist-whoimproved-lives-of-Indonesian-villagers story, 104–105, 139; unconventional philanthropy, 108; woman-with-three-children-in-theirfifties-family-foundation story, 111–112 Entrepreneurial spark, 60 Entrepreneurialism, 57–60 Equality and fairness, 93–102; Chinese law, 98; clear expectations, 97; dollar-for-dollar equality, 96; equality based on need, 96; equalization clause, 95; fairness, 96; primogeniture, 96, 97; “right” to wealth, 98–99; sister-who-thinks-equal-division-of-assets-is-unfair story, 93–94; Texan-patriarch-suffering-from-dementia story, 100–101; ultimate test of fairness, 101; understanding the rules, 97, 101– 102; what is “real” underlying issue, 99–101 Equalization clause, 95 Estate planning, 127–129 Estate tax, 127 European-business-owner story, 69–70 “Everyone is doing it,” 28 Failed marriage, 83–85 Fairness, 96 See also Equality and fairness Fame, 24 “Family,” 65 Family bundling, 88 Family charter, 54 Family charter strategy, 133–134 Family constitution, 54 Family estate, 124–127 Family farm, 122–124 Family foundation, 109–112 Family governance experts, 54, 56 Family governance structures, 54 Family legacy, 119–121 Family-member-steward story, 61 Family office, 28 Family office conference, 28 Family stories, 117–119 Family support, 15 Family trusts, 42–44 Family wealth secrets, 35–49; comfort/embarrassment, 39–40; cultured-upbringing story, 39–40; development of secrets by circumstance, 40; development of wealth secrets, 39–40; fear, 40–41; legacy secrets, 41–42; purpose of wealth, 46–47; responsibilities of wealth inheritor, 47–49; rule (secrets should almost always be exposed or broken), 49; “stolen business” story, 45; testamentary plans, 45; 30-year-old-who-thought-trust-bigger-than-it-was story, 44; trusts, 42–44, 48; trusts for minors, 43–44; values/ideals, 39; wealth-secret story, 35–39; when to keep wealth secrets, 44–45 Family wealth stewardship, 60–61, 134–135 Farmland (family farm), 122–124 Fear, 40–41 Female-business-owner story, 73 Fiduciary standards, 42 Fifth-generation-of-wealth-inheritance story, 70–72 Financial insecurity, 137 Financial security, 12, 17, 137–139 Finding yourself, 54–55 Foolishness, 128 Forks in the road, 55 Fortitude of human character, 14 Fossil fuel divestment movement, 110 Four-French-sisters story, 51–63 Freedom from wealth, 33, 52, 70, 118, 133, 134, 137 (also in Conclusion) Freedom from Wealth: The Experience and Strategies to Help Protect and Grow Private Wealth (Lowenhaupt/Trone), 47, 135, 145 n.1 Gates, Bill, 106, 107 Generation-skipping transfer tax, 127 Gift tax, 127 Globalism, 135 Governance experts, 54, 56 Governance structures, 35 Greitens, Eric, 139–140 Groupthink, 27–28, 29 Gut instincts, 29–31 Happiness, 15, 137 Health, 14–15 Herd mentality, 27–29 Holocaust, Impact investments, 110 Improving-welfare-of-prison-population story, 55–56 Index funds, 109, 111 Indirect communication, 72–73 Individual aspirations/limitations, 62 Industry jargon (terminology of family wealth), 64–66 Interests/passion, 5, 15, 54–55 International fossil fuel divestment movement, 110 Investment-banker’s-true-passion story, 136–137 Investment conference, 28 Isolation through distrust, 33 Jargon (terminology of family wealth), 64–66 Know yourself, 51–62; dentist-who-opened-pawn-shop story, 59–60; eleven-children-without-entrepreneurial-spirit story, 58–59; entrepreneurialism, 57–60; family-member-steward story, 61; family wealth stewardship, 60–61; finding yourself, 54–55; forks in the road, 55; four-French-sisters story, 51–63; governance experts, 54, 56; improving-welfare-of-prison-population story, 55–56; individual aspirations/limitations, 62; leading life on your own terms, 62; passion/interests, 54–55; reconciling family expectations and personal goals, 55–57; Scandinavian-patriarch-who-forced-heirs-into-entrepreneurialism story, 59; starting point (what you want of your life), 54; templates and advisors, 53–54; wealth preservation, 60–61 Land ownership, 121–124 Lawyers, 23 Leading life on your own terms, 62 Legacy, 119–121 Legacy family wealth secret, 41–42 Legacy-of-entrepreneurism-wisdom-and-vision story, 119–120 Life lessons or experiences, 15 Long-term perspective, 115–130, 143; author’s-family’s-experience-with-farmland story, 115–116; estate planning, 127–129; estate tax, 127; family estate, 124–127; farmland (family farm), 122–124; foolishness, 128; generation-skipping transfer tax, 127; gift tax, 127; land ownership, 121–124; legacy, 119–121; legacy-of-entrepreneurism-wisdom-and-vision story, 119–120; listening and telling family stories, 117–119; long-term trusts, 128–129; perpetuity, 130; taxes, 127–129; timberland, 121–124 Long-term trusts, 128–129 Lowenhaupt Global Advisors, 40 Madoff, Bernie, 23, 28 Marriage, 75–92; arranged, 80–81; children, 85–86; commitment, 82–83; couple-afraid-to-tell-parents-about-marriage story, 81; cultural and jurisdictional differences, 89–91; divorce, 83–85; dragging spouse through a new life, 86–87; failed, 83–85; familial exclusion, 87– 88; familial priorities, 88–89; family bundling, 88; family disapproval, 85; how will spouse deal with your family?, 86–87; mostextravagant-wedding-in-history story, 79–80; prenuptial agreement, 21–22, 75–76, 77–79; questions/discussions to have before marriage, 91–92; religious differences, 90; risks, 81–88, 92; selecting your own partner, 81; spouse’s exclusion from family meeting/decisions, 87–88; strategy of love, 91–92; wedding, 79–80; “wedding-no-matter-what” wedding, 80 Meandering (finding yourself), 55 Mexican-fisherman story, 1, Military veterans, 140 Mission, 139–140 Mitigating risk, 58 Money: opportunity, not burden, 132; role, 2; self-actualization, 15; what money cannot do, 14–15 Monks/monastery, 13, 139 Most-extravagant-wedding-in-history story, 79–80 Multicultural marriage, 89–91 Nagle, Jacob, 117 “Network,” 65 “Networking,” 29 9/11 terrorist attacks, 103 Notoriety, 23 Objective standards, 56 “Office,” 65 Oil-on-Texas-land story, 27 O’Leary, John, 15, 16 On Fire: The Seven Choices to Ignite a Radically Inspired Life (O’Leary), 15 Optimism, 107, 139–140 Passion/interests, 5, 15, 54–55, 135–137 “Passionately,” 136, 137 Passive investment strategies, 109 Patience, 54 People of culture, 40 Perpetuity, 130 Perseverance, 16 Philanthropy See Engaging in your community Prenuptial agreement, 21–22, 75–76, 77–79 Preservation of wealth, 60–61 Primogeniture, 96, 97 “Private,” 65 Process, 31–32, 35, 42, 65, 111, 113 Professional people, 23 Profiles of wealth creators/inheritors: accidental wealth holders, 3, 5–6; wealth masters, 3, 10; wealth spoilers, 3, 8–10; wealth stewards, 3, 6–8; wealth toilers, 2, 3–4 Pursuing your passion, 5, 135–137 Putting money in its place, 12, 16 Rank, Mark, 132, 133, 137 Reality check on wealth, 40 Reconciling family expectations and personal goals, 55–57 Refugees, 3–4 Relationships, 14, 21 Religious differences, 90 “Right” to wealth, 98–99 Risk mitigation, 58 Rockefeller, John, 107, 110 Rockefeller Brothers Fund, 110 Role clarification, 32 Role of money, Role of wealth in your life, 12 Saying it directly, 63–74; Asian-patriarch story, 67–68; Chinese-family-with-four-children story, 63–64; direct language, 70–72; European-business-owner story, 69–70; female-business-owner story, 73; fifth-generation-of-wealth-inheritance story, 70–72; indirect communication, 72–73; terminology of family wealth, 64–66 Scandinavian-patriarch-who-forced-heirs-into-entrepreneurialism story, 59 Self-actualization: American Dream, 132, 133, 141; community engagement, 104, 107; creation of great wealth, 138; defined, 106; entrepreneurialism, 59; family culture, 62; family foundation, 106; family vision, 56; financial security, 12, 137; money, 15; openness and honesty with parents, 12; optimism, 107; personal characteristics, 15; satisfaction, 62; strategic philanthropy, 105, 106; trusts, 43; ultimate challenge for wealth inheritor, 141; universal desire, 133; wealth master, 10; wealth spoiler, 9, 10 September 11 terrorist attacks, 103 Serendipitous experiences, 55 Sister-who-thinks-equal-division-of-assets-is-unfair story, 93–94 Socially responsible investments, 110–111 Spiegel, Evan, 138 Starred capabilities, 55 Start-up mentality (entrepreneurialism), 57–60 Stewardship of wealth, 60–61, 134–135 Sting (musician), 5, 10 “Stolen business” story, 45 Strategic philanthropy, 104–106 Strategy of love, 91–92 See also Marriage Surfer-philanthropist-who-improved-lives-of-Indonesian-villagers story, 104–105, 139 Swiss bankers, 35 Taking the long view See Long-term perspective Taxes, 127–129 Teamwork, 32 Templates and advisors, 53–54 Tennyson, Alfred, 21, 145 n.1 Terminology of family wealth, 64–66 Testamentary plans, 45 Texan-patriarch-suffering-from-dementia story, 100–101 The Mission Continues, 140 30-year-old-who-thought-trust-bigger-than-it-was story, 44 Timberland, 121–124 Too-good-to-be-true scenario, 25–27 Trusting others, 19–34; “cloak” of trust, 23–25; Doug’s story, 19–20; evaluating your trust in others, 22–31; gut instincts, 29–31; herd mentality, 27–29; isolation through distrust, 32; process, 31–32; too-good-to-be-true scenario, 25–27; warnings/red flags, 22; wealth creators and trust, 21–22 Trusts, 42–44, 48, 128–129 Trusts for minors, 43–44 “Ultrahigh” wealth, 66 Vaccinations, 14 Value investing, 28 Values, 15, 39 Vanderbilt, Cornelius, 106, 107 Volunteerism, 112, 140 See also Engaging in your community Wealth inheritors: family wealth secrets, 47–49; freedom from wealth, 134; leading life on your own terms, 62; profiles; ultimate challenge, 141 See Profiles of wealth creators/inheritors Wealth management, 131 Wealth Management Unwrapped (Beyer), 134 Wealth master, 3, 10 Wealth preservation, 60–61 Wealth secrets See Family wealth secrets Wealth spoiler, 3, 8–10 Wealth steward, 3, 6–8 Wealth toiler, 2, 3–4 “Wealthy,” 65–66 Wedding, 79–80 See also Marriage “Wedding-no-matter-what” wedding, 80 Woman-with-three-children-in-their-fifties-family-foundation story, 111–112 Work ethic, 15 Zuckerberg, Mark, 106 About the Author Charles A Lowenhaupt is chairman and CEO of Lowenhaupt Global Advisors A recognized industry leader in managing wealth for ultrahigh net worth families around the world, he is also managing member of Lowenhaupt Global Advisors’ affiliated firm, Lowenhaupt & Chasnoff, LLC, which was the first U.S law firm to concentrate in tax law and was established by Charles’s grandfather in 1908 Lowenhaupt is a founding advisory faculty member of the Institute for Private Investors He is also a cofounder of the Leadership Center for Investment Stewards, a commissioner of the St Louis Art Museum, and a director of the Urban League of Metropolitan St Louis He holds a bachelor of arts degree (cum laude) from Harvard University and a juris doctorate (Order of the Coif) from the University of Michigan Law School He is a member of the Bar of New York and Missouri Charles is coauthor with Don Trone of Freedom from Wealth: The Experience and Strategies to Help Protect and Grow Private Wealth (McGraw-Hill, 2011) ... become the person you have always aspired to be? Are you and your family closer or further apart due to your wealth? Do you sometimes wish you didn’t have your wealth? As I have traveled around the. .. wisdom of the more than a century that my family has been working for wealth creators and inheritors, explore some of the solutions to the issues wealth inheritors face, and discover the many... Looking at your parents, where their wealth came from, and how they view the relationship of their wealth to you, will help you build perspective as you analyze what you want out of your wealth and