Fables of Fortune

by Richard Watts

  A friend of mine began dating Angela, one of the two Campbell daughters. Bill married Angela in a royal extravaganza. My wife and I had never experienced a spectacle quite like it, and their marriage seemed to have an auspicious beginning.

  TRADING AWAY IDENTITY

  Within the first few months, Dad helped the young couple to finance the purchase of a brand-new home in an upscale private community. Because Bill was educated as a high-school teacher, his salary couldn’t pay the property taxes on their home, much less the mortgage. So Bill took a position in the family business, managing the customer service department. Dad Campbell arranged to pay him three times as much as the position would pay a non-family member.

  Angela had never been denied anything by her dad or mom. When she wanted a new car, she simply asked for one. Without any discussion with her new husband, Angela drove up in a new car. She wore expensive designer clothing and carried a company credit card. No one asked her to turn it in when she got married. She loved to shop without ever looking at a price tag. Monthly statements were paid by the company comptroller. The word budget didn’t apply before her marriage, and Angela and Bill never discussed one after the wedding.

  From the outside, you might think Bill had won the lottery when he married Angela. But in my years of experience in dealing with the super-rich, I’ve discovered, as a rule, the day a non-family member takes the first dollar or job from the family, he or she immediately loses a level of respect in the eyes of the in-laws. Why? The patriarch of a wealthy family typically achieves his position by a focused and unrelenting commitment to hard work. The fact that a non-family member gets access to wealth by marriage (for “free”) is like a speck of sand in an oyster that begins to cause irritation from day one. But the end product is never a pearl; it’s a festering ulcer.

  The newlyweds started hot out of the blocks, and within a year they seemed to be far ahead of the rest of their peers. They bought a real estate lot on the beach, then designed and built a new home three times larger than any of our modest homes. They bought fancy cars, had a new baby on the way, spent weekends at the family lake house, and took vacations in places I could only dream about as a struggling young attorney.

  My friends and I listened to Bill and Angela’s exploits, from their boats to their homes, from their children’s accomplishments to their business successes. I recall numerous conversations at dinners and cocktail parties when all our wives were listening to Angela. Their eyes were misty with imagining how wonderful it would be to live her life. I used to watch the faces of the husbands as Bill bragged. Their eyes never left the ground, because they felt they should have been able to provide these same luxuries for their own families. Many of us forgot to cherish our own experiences as we envied Bill and Angela.

  Over time, we all began to feel the beginnings of resentment. People raised by working parents usually assimilate an ethic that says you have to work for what you get, you get what you earn, and what you take for granted, you lose. The newlywed Campbells’ lifestyle seemed to defy those basic truths.

  If they had been smart enough to strike out on their own and establish boundaries as a couple, perhaps they might have made it. I’ve seen this happen once or twice, but success is rare.

  Soon after marrying into wealth, the “pauper” spouse gets used to having money. Wealth is a narcotic, hooking those who experience it with the engaging lifestyle of the super-rich. Soon Bill and Angela became members at the country club, the tennis club, and the seaside yacht club, hobnobbing with the elite at every social event. Bill started bragging to his buddies about a work week of Monday through Friday, from 10:00 a.m. to 3:00 p.m., with every Thursday off for golf.

  The couple rarely spent time with their old friends on the weekends, because the Campbell extended family was always involved in one grand affair or another. Like expensive luggage, Bill—the in-law—was pulled along on the family’s travels … at no charge, of course. Somewhere down the road, Bill started to question his value in the eyes of his wife and children. His insecurity led to more boasting, which caused Bill to become more isolated from his friends, thus increasing his feelings of inadequacy. The vicious cycle continued, and after three years and several more kids, the stage was set for disaster.

  ENTERING THE VORTEX

  Bill was a competent, hard worker, so Dad Campbell promoted him to the position of company president (primarily because the rest of the family never showed up). He became heavily involved with the financial business of the family, directing the family attorney, accountant, estate planner, and other financial advisers.

  Soon the remainder of the family recognized Bill had the approval of their father and was slowing gaining control of the family empire. Another force of human nature surfaced in response: sibling rivalry. Unfortunately, when “blood family” senses a threat from the intruding in-law, they can assemble quickly and purposefully, like a pack of wolves.

  For the first time—or at least the first time in a long time—Mom and Dad Campbell watched their children come together to discuss business issues and family concerns, exhibiting sincere interest in the family enterprise. In reality, the Campbell siblings were scheming about how to deal with Bill.

  Like a deer in an open field, Bill never saw the members of the family circling around him. Over the next few months, each family member verbalized misgivings about Bill’s actions in the company to Dad and Mom Campbell, raising doubt about his motives in controlling the family business. This synchronized symphony of suspicion comes naturally to siblings of wealth when their territory is threatened. Even the most detached or uninvolved family member suddenly comes up with eloquent commentary about family values and the need to carefully manage the family’s wealth for the future. This development is often erroneously perceived by the parents as baby steps toward assuming authority.

  Dad and Mom Campbell were proud. Parents in this scenario don’t want to discourage this newfound camaraderie in their family, and if the only action necessary to appease the concerns of their children is to sacrifice their in-law, the decision is simple. In the Campbells’ case, Bill was expendable.

  THE SPOUSE TAKES SIDES

  Stop for a moment to focus on Angela. Wouldn’t you expect her to come to Bill’s rescue? After all, she married Bill and was raising a young family with him. But her friends and family had begun to undermine Angela’s relationship with her husband. “Bill didn’t earn his position.” “He’s always looking for a handout.” “It’s your money, right?”

  Angela brushed off their comments at first, but eventually her kids began to fall victim to the vicious rumors and cutting remarks. Society is often cruel and unforgiving. People seek to level the playing field, even if there are undeserving casualties. Angela began to tell Bill, “You need to make a greater effort to get along with my family.” Her implication was clear. Bill didn’t count as “family” anymore. The price of admission to the family had changed; he had to be a blood relative. The grandchildren were welcome, but Bill was treated as an intruder.

  Relations between Bill and Angela began to deteriorate, and Bill was slowly excluded from family affairs. Covertly, the family moved Angela’s parents, siblings, and children onto one side and placed Bill on the other. The pack of wolves devoured Bill, offering condolences to Angela and extending a welcome arm to the children.

  A WORD OF WARNING

  Let me offer a hard and fast boundary to protect marriages involving wealth: Be very reticent to work for your in-laws. As I reminisce over the past thirty years, I can recall countless individuals who have run or managed the companies or businesses of their super-rich in-laws. They make up a veritable graveyard of adverse outcomes and strained marriages.

  My wife and I ran into Bill at a breakfast diner. After fifteen years of marriage and a nasty divorce, he was unshaven, wearing a rumpled white T-shirt and tattered beach sandals. He looked like a bum. His spirits were dim. We talked for a few moments about his kids, who were away with “the family” on
a cruise.

  He lived in a small two-bedroom apartment in a very modest part of town just down the street from the diner. The second bedroom was for his kids; he saw them only every other weekend. Otherwise he lived alone. I think of Bill as a good guy who wandered into Willy Wonka’s candy factory and drank so much chocolate from the waterfall he drowned.

  “Aren’t you going to ask me how I fared in the divorce?” Bill rolled his eyes with a gentle smirk on his face. He knew I didn’t have to ask. At Dad Campbell’s request, I had drafted Angela’s prenuptial agreement.

  If you are a person of modest means who has wandered into a family of fortune, take this sage advice. Love your spouse, and let him or her be responsible for every interaction with his or her wealthy family regarding financial issues. Never presume your spouse’s wealth is your wealth. Try your best to live by your own means, and avoid employment in the in-law’s family enterprise. You will experience the joy of achieving your own goals, your spouse will respect you and your efforts, and your children will grow up in the presence of a model of solid character and integrity.

  CHAPTER EIGHT

  BITTER FAMILY BATTLES

  Sylvia was his fifth wife.

  Elliott Frederick’s three children spent most of their lives putting up with their father’s marital choices. Their natural mother, Elliott’s first wife, had divorced him for philandering long before Elliott became wealthy. She lived in a modest house, which she paid for by working as a secretary for a local real estate broker. Her relationship with her children couldn’t have been more heartfelt and sincere. Mom did not cause or retain significant animosity by jumping ship early in her marital career. She hadn’t married him for his money.

  Unfortunately, from Elliott’s second wife onward, his money drew women like a magnet. Each time he brought a new wife into the family circle, the children grudgingly tolerated her obvious ulterior motive for marrying Elliott. By wife number four, the kids angrily refused to allow Elliott’s grandchildren to call her “Grandma.”

  Immediately after marrying him, number five focused on ensuring her future upon Elliott’s death. Sadly, at the age of seventy-five, Elliott was beginning to slip mentally and typically agreed with the person he had spoken to most recently. In fact, he met Sylvia when she served him breakfast in a local diner. After a few weeks, she’d convinced him he couldn’t live without her. Elliott craved attention, and Sylvia was happy to provide it.

  She quickly restricted Elliott’s access to his children. Then she hired an estate-planning lawyer to redo Elliott’s family trust, making her the beneficiary of the family business and several of the oceanfront properties. The total package she negotiated was worth between $50 and $60 million.

  ENTER THE LAWYERS

  Nine times out of ten, family battles among the super-rich are fought over money. In general, conflict increases in direct proportion to the amount of wealth involved. Sons, daughters, brothers, and sisters become willing to destroy family relationships as acceptable casualties in pursuit of victory. By the way, I do not include simple arguments or disagreements in my definition of “family battles.” True family battles escalate into full-blown court cases, with law firms fighting for each side, airing the family’s dirty laundry in public.

  At the time of Elliott’s marriage to Sylvia, his oldest son, Scott, had served as president of the family business for twenty-seven years. When he asked to see a copy of the new trust, the family lawyer replied he had been specifically instructed not to share the trust. Scott met with his siblings, and together they hired an attorney to investigate.

  The super-rich always hire the best—and most expensive—litigating lawyers. As a rule, lawyers gain their reputations by winning cases. Scott, his siblings, and Sylvia entered the boxing ring expecting a sure victory regardless of the cost. Large law firms of this ilk pride themselves on being “billing machines.” Monthly invoices on each side commonly add up to more than $100,000, and triple that amount during the trial. The super-rich are perfect clients. Each side is headstrong and unwilling to compromise. I’ve often heard them exercising bragging rights at cocktail parties: “My lawyers are killing me. They’ve billed me over $2 million so far, and they tell me we haven’t finished investigating yet.”

  After two years and more than $5 million in attorney’s fees, not to mention the depositions of twenty-six witnesses and every family member, the lawyers were no closer to resolving the dispute than they had been in the beginning. Elliott’s children didn’t have the legal right to see the trust. All of the lawyers knew it. Sylvia knew it. End of game … until Sylvia became too greedy.

  Sylvia fired Scott without severance, giving her son, Greg, presidency of the company. He fired all the other family members to ensure loyalty. However, his previous career as a real estate agent hadn’t begun to prepare him to master the ins and outs of an international manufacturing company specializing in high-tech airplane- and rocket-engine components. The business suffered.

  Elliott’s children retained the same lawyers and sued Sylvia again. This time they added wrongful termination of employment and fraud to the suit because Elliott had promised his oldest son the right to buy the company upon his death. During the trial, Elliott’s dementia revealed itself, as did Sylvia’s role as his puppeteer. She coached Elliott to show up and deliver his lines. He couldn’t. Each day in front of the jury, he tried to recall what had happened … and each day he told a different story.

  The jury watched the machinations of a greedy fifth wife and called her on it. They found Scott’s story compelling and awarded him $32 million in damages against his father. Sylvia refused to accept the game was over. She plunged her new spouse into bankruptcy to protect what little she still could take from him. Not until she had destroyed fifty years of good credit and negotiated about $10 million for herself did she let the rest go to Elliott’s son and family.

  Elliott has not seen any of his family since the day of the final court ruling. They don’t know where he is, if he is still married to Sylvia, or even if he is still living.

  FALSE SECURITY

  Money provides a counterfeit sense of security. It represents what we can have and what we won’t have to do without. If we have money in the bank, it is less likely we will worry about the cost of food for our families. If we have a little more money in the bank, we may have the right to buy a house. Notice I mentioned the “right” to buy a house. Home ownership is not a “need.” A rented home or apartment satisfies the same need for shelter. As we exercise our right to buy a house, we take out a mortgage. Now we “need” to pay the mortgage. To feel secure in a home and not risk losing it to the bank, we are required to make the mortgage payment. But remember, we are only contractually required to make the mortgage payment. It is always possible to sell the house and rent a place to live.

  Now add a car, a second car, gasoline, plasma-screen televisions bought on credit, a loan for a swimming pool, a retirement savings account, college tuition for our children, medical insurance, and even a vacation home. Every time we exercise our right to acquire something else we want but don’t necessarily need, we increase the financial requirements for maintaining that lifestyle. Wants become needs.

  As we acquire, our feet lift off the ground. The more we acquire, the further we move from reality. Before long, we are so far off course we cannot determine what we can do without. We lose sight of the basic priorities of sustenance, family, and spirituality. Eventually, we might even worry more about maintaining a vacation home than about the future educational costs for our children.

  How does this principle apply to the super-rich? They are so accustomed to all of the “wants” they have acquired they don’t isolate individual items any longer. The cost of their lifestyle is enormous. Add the children of the super-rich to the recipe and a second generation starts life with their feet high above the ground. They don’t have any idea about what life’s terrain looks like. They have never experienced “need.” They only know “want.�
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  Unlike the rest of us, financial security isn’t an issue or a goal for the super-rich—until someone tries to take it away. Only then do they imagine what it might be like to do without “wants,” not to mention needs. Generally, when family members attack each other, the stakes are high and the fear of losing financial security can border on hysteria. A divorcing spouse will do everything he or she can to take a good chunk of the fortune. Add a couple of bad marriages, and the costs become exponential. Even someone with a personal fortune of $100 million is at risk. Family battles begin when the super-rich become aware of that risk … usually for the first time.

  THE SPOILS OF WAR

  Joe’s grandfather pioneered the idea of offering low-priced electronics to the public. He was a stern, frugal man, epitomizing America’s classic entrepreneur. During much of his lifetime, the family business was in growth mode. The children were raised modestly, with good family values. At a typical holiday gathering, a table for thirty-five people extended from the family dining room into an area of the grandparents’ home built specifically to accommodate the extended family. Laughter and banter over the economy, politics, and more filled the room.

  An undercurrent of thankfulness always seasoned Grandpa’s words. He repeatedly declared, “Never take these blessings for granted. Everything can be taken away. We need to appreciate every minute of this family’s success. This wasn’t my accomplishment. The Almighty gave this to our family, and He expects us to be good stewards of our gift.”

  The children and grandchildren weren’t completely sure how the family’s fortune had been made, but they were well-versed in the fact it could be taken away at any time. They heard it daily.