Poor little rich kids – the perils of inheriting vast wealth

Emine Saner in The Guardian

It is reported that when the 6th Duke of Westminster, who died this week, realised at the age of 15 that he was heir to his family’s immense fortune, he dreaded it – the responsibility, the knowledge that he hadn’t earned it, the isolation it would bring him. He would have prepared his son for the eventuality of becoming duke, although neither would have wanted to think it would happen as early as it did. On Tuesday, Gerald Grosvenor died suddenly at the age of 64; his son Hugh, now the 7th Duke of Westminster, is just 25 and inherits the family’s £9.3bn fortune.

Aside from the trauma of losing a parent – having money does not ease the pain of bereavement – the 25-year-old finds himself in both an enviable, and unenviable, position. On the one hand, he becomes one of the richest men in the world; on the other, money didn’t bring happiness to his father, who appeared to find his title and wealth a burden. “Given the choice I would rather not have been born wealthy, but I never think of giving it up,” he said once. “I can’t sell it. It doesn’t belong to me.”

The Duke of Westminster



It is, however, very difficult to feel sorry for the rich, which is, in itself, a problem for many of them. “They know that others have no sympathy for them, and no understanding of the situation they’re in,” says Thayer Willis, author of Navigating the Dark Side of Wealth: A Life Guide for Inheritors, who runs a counselling business helping the rich deal with the psychological challenges of wealth. “They know not to go around whining and expecting people to feel sorry for them.”

But there are serious challenges that come from inheriting vast fortunes, she says, particularly at a young age. Willis knows many of them herself – she was born into the family that started the Georgia-Pacific Corporation, a timber company worth billions. “I stumbled through my 20s and made a lot of mistakes,” she says.

“For all of us, our 20s and 30s are the ‘building years’, when we’re meant to get out in the world, figure out who we are, what we like to do, who we like, who we like to date,” she says. “Having a tremendous amount of financial wealth come into your life at that point really messes with motivation. All of a sudden the question becomes: ‘What do I need to do to manage this wealth?’ instead of: ‘How do I identify and clarify who I really am?’ People’s motivation to be around you becomes questionable. Are they attracted to me or to this wealth?” These are “definitely first-world problems, but it certainly messes with the psychological development of that young adult”. In her 30s, Willis settled down, trained as a psychotherapist and became a wealth counsellor.

If it’s so awful – an obvious question – why not give the money away? “Some people think of that, usually to the horror of the family. Older family members understand what this money can do in terms of providing a resource for any kind of emergency, or starting a business, or philanthropy.”

For inheritors of wealth going back generations, there is a sense, as Grosvenor said, that they are mere custodians and the money isn’t theirs to give away or lose. “I’ve seen some quite young heirs who really understand the dynastic vision of a family from a pretty early age,” says Julian Washington, head of intermediary relationship management at RBC Wealth Management. “They don’t want to be the weak link in the chain when the family story is told. In my experience, when you deal with old-money families, if you want to call them that, they tend to be pretty good at educating their next generation, because typically they’ve been doing it for centuries.” And when someone – a male member of the family, thanks to outrageous primogeniture – comes to inherit, “more often than not they’re in a pretty good place because they come to it with all that tradition and they understand the nature of the shoes they’re stepping into”.

Mark Zuckerberg and Priscilla Chan Zuckerberg have decided to give away 99% of their fortune – but their daughter, Max, could still inherit $450m. Photograph: AP

Plenty of members of the super-rich have already decided not to burden their children with vast, unearned fortunes in the first place – it is enough that they have had expensive educations and all the opportunities of a privileged start in life. Warren Buffett’s famous take on inheritance is to leave his children “enough money so that they would feel they could do anything, but not so much that they could do nothing”. It has been reported, though not confirmed, that Bill Gates plans to leave his children a meagre $10m (£7.7m) each from his $76bn fortune. Mark and Priscilla Zuckerberg have pledged to give away 99% of their $45bn pile(although it’s all relative – this still leaves them, and their daughter, with $450m). Not quite on the same financial scale, Nigella Lawson has said she isn’t planning to leave her children anything: “It ruins people not having to earn money.”

Sam Roddick, the daughter of the Body Shop founder Anita Roddick, didn’t know that her mother, who died in 2007, had planned to give away her entire £51m fortune. “We found out when it was published in a Daily Mail article,” she laughs. It wasn’t entirely a surprise – her parents were socialists, rather than socialites, and their business was famous for its fair-trade principles. And it wasn’t personal. Cutting one’s child out of your will can, to some, seem like “a deep act of abandonment. I never had that abandonment because I had a healthy relationship with her. I know other people who haven’t been given money and it has been a huge act of aggression.”

Duke's £9bn inheritance prompts call for tax overhaul



Roddick was also unusual among the children of the rich in that she hadn’t grown up surrounded by wealth. She was largely brought up by her working-class grandmother, “and working-class values – you work hard, you earn your keep and you contribute to society. Entitled people from inherited wealth are all about other people being in service to them.”

She has observed the very wealthy people she has met over the years. “They are isolated from normal society,” she says. With the extremely wealthy, “relationships become transactional, and that is something that is extraordinarily emotionally damaging. A lot of very wealthy people are not accountable to their community, they’re not accountable to the people they love, they show their power and control through transaction and they are unhappy, from what I can tell. The people I know who are very wealthy and are happy are all contributing something to society.” Until we sort out the rules that allow vast fortunes held in trusts, as the Grosvenor estate is, to avoid hefty death duties and be passed down the generations, it’s something for the new Duke of Westminster and his future male heirs to bear in mind.

The economic argument against neoliberalism

Owen Jones interviews Ha Joon Chang

Trusts keep wealth in the hands of the few. It’s time to stop this tax abuse

Richard Murphy in The Guardian

If there is a name that is synonymous with tax avoidance in the UK, it is that of the Duke of Westminster. The duke in question was, admittedly, the second duke, who in 1936 won an infamous tax case that permitted him to pay his gardeners in a way that avoided a tax liability. He achieved abiding fame as a consequence of the opinion of Lord Tomlin, who in his judgment on that case said: “Every man is entitled if he can to order his affairs so that the tax attracted under the appropriate act is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.”

That statement has, to a large degree, been both the foundation of and justification for all tax avoidance activity in the UK since. That this activity continues is evidenced by the fact that the sixth duke is said to have left an estate worth £9.9bn upon his death this week to his son and yet, despite the fact that inheritance tax is supposedly payable on all estates on death worth more than £325,000, it has been widely reported that very little tax will be due in this case. It seems that the sixth duke has put the second to shame: his forebear saved a few pounds on his wages bill while the sixth has avoided something approaching £4bn. He may in the process have even outdone the fifth duke, who argued the fourth duke died of a war wound 232 years after he suffered it to escape all charges on the estate in the 1960s.

His likely motives for doing so can be easily summarised: there may be greed involved; a belief that the duke’s heirs are better entitled to this property than anyone else; and a hostility to any claim that the state might make on property that has been apparent in the UK aristocracy since the time of the Crusades.

The English legal concept of a trust is believed to have been developed during that era, when knights departing the country with no certainty of returning wanted to ensure that their land passed to those who they thought to be their rightful heirs without interference from the Crown. Trusts achieved that goal and the concept has remained in existence ever since, representing the continual struggle of those with wealth to subvert the rule of law that may apply to others but that they believe should not apply to them.

Recent political challenges have not ended the resulting abuse. Labour tried to introduce effective tax charges on inheritance in the 1970s, the Conservatives undermined them a decade later, and every subsequent attempt to tackle tax abuse using trusts (and Gordon Brown made many), has by and large left existing arrangements intact, only seeking to prevent abuse in new arrangements. As if to add insult to injury, the 2013 general anti-abuse rule, which was introduced by the coalition government and supposedly negated the decision by Lord Tomlin noted above, cannot be applied retrospectively: anything done by a duke before that date is outside of its scope.

So why has this tax avoidance been allowed to continue? First, it’s because no one in the UK has, since 1980, had the political will to tackle the use and abuse of trusts – even though continental Europe has shown it is perfectly possible to run an economy without them. Second, it’s down to the continuing power of the aristocracy and their chosen professional agents (lawyers, accountants, bankers and wealth managers) who have been willing to compromise themselves in exchange for fees to perpetuate the situation. And third, it’s because the Conservatives, in particular, have been keen to let the situation continue unchanged as they support the largely unfettered inheritance of substantial wealth. 

Another issue is that we know so little about trusts even when they are at least as powerful as companies and are even more commonly used for tax abuse. This is because of a mistaken perception of privacy, which should only be due to individuals and not artificial arrangements created by law, which trusts are. This can be corrected: we need transparency and that means a full register of trusts and their accounts on public record above modest financial limited, as for companies.

What can be done about this? In addition to the points already noted, the obvious solution is to abolish the inheritance tax reliefs that permit this tax avoidance, whether that be for trusts themselves or for those who own private companies and agricultural land. Inheritance tax assumes that the children of the wealthy are the rightful best next generation of managers of these assets and so lets them be passed on to them tax free, perpetuating wealth concentration in the process.

To put it another way, 800 years of claims by an elite to be above the law applicable to everyone else so that wealth can remain in the hands of the few has to be brought to an end. And if now is not the time to do it, I am really not sure when it will be.

Think loneliness is about single people looking for love? Think again

Gaby Hinsliff in The Guardian

It’s hard to feel alone inside a long and happy marriage. But it’s easier than it looks, perhaps, to feel lonely. Last week, Italian police officers responding to reports of screaming and crying inside an apartment in Rome found something unexpected behind the door. Jole and Michele were a devoted elderly couple who had ostensibly got themselves worked up over a sad story on the TV news, but some gentle questioning elicited the fact that both were struggling with terrible loneliness. After 70 years of apparently loving marriage they still had each other, and yet that clearly was not enough.

This being Italy, the officers rather charmingly cooked them a meal of spaghetti with butter and parmesan and stayed to chat, before doing the washing up and posting a flowery account on Facebook of how loneliness can suddenly sweep over you “like a summer storm”. The story went viral because it’s so heartwarming, and yet on second reading it’s also rather unsettling. The lonely are not quite the people we think they are.

It will be 20 years ago this summer that the first Bridget Jones novel was published, a timely reminder to ignore the spectacularly awful sequels and remember just how neatly the original skewered some of the myths about lonely singleton life.

Bridget was famously terrified of dying alone and forgotten, but ironically the one thing she wasn’t was lonely: she was riotously surrounded by friends and family, even if they did all keep harping on about her getting a proper boyfriend. It’s smug marrieds who can all too easily collapse in on themselves, severing old friendships they will come to regret in the process. (Anyone who thinks that having a baby means you’ll never feel alone again, meanwhile, has yet to find out how it feels to be home with a howling infant, desperately trying to engage the postman in conversation because he’s the only sentient adult you’ll see for hours.)

It’s all too easy to become consumed by family life and then wake up in middle age, ostensibly at the centre of a rich and busy life, struggling to remember your last meaningful conversation. That feeling may not be loneliness yet, but it’s a first step on the road.

For while the cavernously empty feeling endured by the bereaved or unwillingly single can indeed be a terrible thing, and life-shortening to boot, it’s not the only kind of loneliness. A recent University of California study found that while almost half of its elderly subjects confessed to feeling lonely at times, only 18% of them actually lived alone.

Unhappy marriages, atrophying into long silences and separate lives, might have something to do with that, but the story of Jole and Michele suggests something else: a distinct kind of loneliness stemming not from the absence of significant others but from a feeling of disconnection with the wider world, a sense that you’re no longer part of something shared and human. Is it just a coincidence that the Italian couple’s crisis seems to have been provoked by a run of news stories – violent attacks, abuse at a kindergarten – revealing human nature at its coldest?

Fleeting loneliness comes to all of us occasionally, but it solidifies into something deeper and darker for those who start to perceive the world as a harsh and hostile place, one that wouldn’t welcome efforts to connect even if you try. It’s that nagging feeling of rejection, of not belonging or standing somehow apart from others, that is the true hallmark of feeling lonely in a crowd, and it’s by no means the preserve of the old.

Interestingly, a recent Brunel University study of over-50s found more than half of those identifying themselves as lonely had been that way for over 10 years, suggesting the feeling had become part of the fabric of their lives. (The same study, by the way, found levels of loneliness had barely changed since the second world war; so much for the idea of a modern epidemic, caused by fragmenting and hectic modern family lives.)

The future of loneliness



So perhaps it’s not so surprising that this week’s obituaries of the fabulously wealthy Duke of Westminster, a father of four, should describe him as “lonely”. Immense wealth can of course be isolating – although the money clearly didn’t make the duke unhappy enough to get rid of it, or indeed to eschew the family tradition of minimising inheritance tax liabilities – but in Gerald Grosvenor’s case something else seems to be going on. What emerges is a picture of a man struggling all his life with feelings of inadequacy and anxiety, worried that he had done nothing to live up to the reputation of those ancestors who built his unearned fortune. Bullied at school, he reportedly left Harrow without one proper friend.

And if you can’t bring yourself to feel sorry for a billionaire, the blunt truth is that not all lonely people are lovable old grannies who tug at your heartstrings. An unhappy few have pushed others away with their self-destructive behaviour and are now paying a high price for it; some have struggled bitterly all their lives with the art of making friends, never quite mastering social norms. How much of the late-night bile spewed on social media simply reflects the envy and frustration of those who see other people happily connecting all around them and just don’t quite know how to join in? Loneliness has its dark side, one not so easily solved by more visits from the grandchildren or well-meaning volunteer “befrienders” popping in for chats over coffee.

For Jole and Michele, at least, perhaps there will be a happy ending. Now their story has been made public, perhaps surviving relatives or old friends will rally round, and if nothing else the knowledge that strangers worldwide are now asking how they can send letters or visit must do something to restore their faith in human nature.

Yet while a little kindness goes a very long way, it’s too easy to pretend loneliness can all be solved by a few more companionable plates of spaghetti. It makes for a less heartwarming story but the truth is that, like the poor, the lonely may to some degree always be with us – even, perhaps, when they’re ostensibly with someone else.