Gloria Vanderbilt, an heiress of the Vanderbilt dynasty, recently died at age 95.
The Vanderbilt family (and specifically Cornelius Vanderbilt) earned enormous wealth from the early development of the railroad and shipping system in the United States in the 1850’s (in the era of Abraham Lincoln, 49’ers, the Transcontinental Railroad, and the exploration of the West). Indeed, in his day, Cornelius was among the richest people of his time; he is also among the wealthiest people ever as measured as a percentage of the world’s wealth at that time.
Notwithstanding the historical nature of Ms. Vanderbilt’s inherited wealth, she was also notable and famous in her own right, namely through fashion, art, and literature. While few make the instant connection, Ms. Vanderbilt was also the mother of famous CNN anchor Anderson Cooper. However, Mr. Cooper never anticipated receiving a dime of his mother’s fortune.
With respect to a potential inheritance, Anderson stated on the Howard Stern radio show: “My mom’s made clear to me that there’s no trust fund. There’s none of that,”
“I don’t believe in inheriting money. I think it’s an initiative sucker. I think it’s a curse,” Cooper said. “Who has inherited a lot of money that has gone on to do things in their own life? From the time I was growing up, if I felt that there was some pot of gold waiting for me, I don’t know that I would’ve been so motivated.”
To Mr. Cooper’s point, he has done extraordinarily well for himself, in spite of a lack of a guarantee of future wealth. After graduating from Yale (one could say, a benefit of his position in “Society”, or perhaps his pure talent), Mr. Cooper has been a notable journalist for more than 20 years, from the start of his career at “Channel One” (a youth oriented news program for high school students) to hosting his own nighty news program on CNN (along with being a face of the network itself).
In the last few days, we have learned that Ms. Vanderbilt actually gave Mr. Cooper the bulk of her wealth in her estate plan (see: https://www.latimes.com/entertainment/tv/la-et-st-anderson-cooper-gloria-vanderbilt-inheritance-20190702-story.html).
What gives?
A parent “psyching” out their children with regards to their potential future inheritance is not a new strategy, for precisely the reasons that Mr. Cooper outlines above — an expectation of a large inheritance is “an initiative sucker”.
If the majority of the children of wealthy people around the world simply knew they would live their life without having to be concerned with financial constraints, would they be inclined to do anything that productively adds to society?
As an estate planner, and as someone dedicated to the “process” of planning, I frequently speak with clients about the character of their children, and whether their children are prepared to deal with an inheritance of their assets. While one size certainly does not fit all, a large inheritance to one child may be a death sentence (through addiction or anti-social behavior), while to another it may be the financial foundation of the world’s next successful corporation.
In other words, so much of an estate plan, and the disposition of assets, is dependent on your family’s circumstances. If obfuscation of your intentions to give (or not give) assets to your children after your death encourages your children’s own productivity, I dare say such deception is noble (with the caveat that deception always causes mistrust, and in turn, strife; it must be used judiciously and for noble purposes).
Here, Mr. Cooper has made a name for himself and gained wealth of his own through his own initiative, drive, and entrepreneurialism, and so Ms. Vanderbilt’s strategy worked - editorially, I hope this newfound inheritance encourages Mr. Cooper’s philanthropic giving from a pot of assets he never intended to have (or frankly needs) - however, this is not the first example of the use of this strategy; Bill Gates and Warren Buffett have notably made similar public promises regarding their children’s prospective inheritance.