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The New Class of Inheritors

Years and years of economic prosperity present both opportunities and difficulties to baby boomer heirs.

October 24, 2000|MIMI AVINS | Times Staff Writer

Winning the lottery, finding a Monet in the attic, or giving Regis Philbin all the right answers--the stuff of daydreams. For a surprisingly large group, reality may prove to be nearly as gratifying as those financial fantasies, since the estimates of the amount of money that the aging parents of American baby boomers will bequeath to them in the next two decades range from $5 trillion to $20 trillion. The total is imprecise, but what's a few trillion, more or less, between generations?

Instead of how much, or when or which presidential candidate supports repealing the current inheritance tax, maybe the more important questions are deeper and broader. Why do parents leave money to their children, and how do the kids, who are usually adults by the time they inherit, feel about money--and sometimes control--from the grave? These are enigmas many more people are confronting as inheritance becomes not just an issue for the very rich.

Young and impressionable during the Great Depression, the generation now in its 70s and 80s was both frugal and lucky. In 1979, the Dow Industrial Average hovered around 700. Now it's over 10,000. Those numbers reflect a period of prolonged postwar prosperity, when many thrifty citizens amassed substantial rainy-day stashes. Any union member who squirreled a little from every paycheck into a 401K plan that was intelligently invested, and bought a home in a good neighborhood could be in a position to leave significant bucks to his kin.

The windfalls that the new class of dot-com gazillionaires will leave their children have gotten more attention, but as profits have spread from Wall Street to Main Street, as the saying goes, a lot of people who think of themselves as ordinary folks could inherit a cool million or two. The secretary at the giant brokerage firm Charles Schwab & Co. who put money in an investment account for 20 years, then retired with $4 million, isn't all that unusual. Co-workers said she didn't act or live or think of herself as a rich person, but then again many beneficiaries of the new economy don't.

As this wealth spreads, a bigger faction of Americans is experiencing the catalog of emotions a gift of money can inspire. One heiress ticked off her list: "There's gratitude and joy, which alternate with feelings of guilt, unworthiness, fear that you'll blow it, fear that others will take advantage of you."

The conflicts are famously disruptive of family harmony, as well as individual serenity. "What does it do to your soul to have a reason to look forward to the death of a loved one?" New York financial manager Stephen Pollan asks. Or, to assume the givers' perspective, which is stronger, the parent-child bond or economic self-interest?

Some people entertain visions of inheriting a bundle as often as a pubescent boy thinks about sex, but talking about it is taboo. "Inheritance combines death and money, which nice people don't discuss in our culture," says John L. Levy, a Mill Valley consultant to wealthy families. Keeping money secrets from family members is so common that when U.S. Trust polled millionaires, most of whom had wills, only a third had shared their estate plans with their children. "It's traditional not to," Levy says, "and when kids work up the courage to ask their parents for specifics, they often get slapped down."

It's enough to induce nostalgia for simpler days, when middle-class inheritances consisted of the family homestead, perhaps a business or a farm. There were few invested assets and not much cash. Siblings could always find a way to squabble over things of more sentimental than monetary value, but for a long time, the rich in this country had cornered the market on problems blamed on too much money.

The character of the wealthy wastrel appeared repeatedly in literature and drama, an object of pity and contempt. Horatio Alger's plucky boys and even Jay Gatsby made more appealing heroes. Aaron Spelling's TV series and much journalism contributed to the canon of the moneyed and miserable; stories about rich dysfunctional families are a staple of glossy magazines and tabloids alike, proof that the fictional Carrington and Ewing dynasties and their real-life counterparts aren't worth envying.

Mainstream culture was merely illustrating the biggest anxiety that inheritance engenders: that money is ruinous because it destroys ambition. Most parents want their children to have the best of everything, but a stubborn puritanical streak has fueled the notion that the material best of times might create a behavioral worst-case scenario--a generation of profligate brats.

Advice columnist Ann Landers echoed the party line in responding to a recent letter. "Money can be the source of a great many family problems," she wrote. "It can kill incentive. Inheriting money is not nearly as much fun as making it yourself."

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