Sarah is an executive in her late fifties. Her parents were affluent. Her father started his own business when she was quite young. When we interviewed her, Sarah was extremely candid about her relationship with her “Papa” and sister.
Sarah’s father was a very strong-willed individual. His views about the role of women in our society were at odds with Sarah’s. He felt that women should be educated in the fine arts and then marry, have children, and never work outside the home. Women, according to Papa’s dictates, were not to have careers of their own. They were to be supportive—even subservient—to their husbands.
As a teenager, Sarah enjoyed debating Papa on numerous topics, including the role of liberated women in our culture. Often these debates turned into arguments centered on how Sarah would spend the rest of her life. Papa frequently threatened his defiant daughter with the loss of financial support for her college education, dowry, and so forth.
In spite of these threats, Sarah left home when she was a young woman. Her papa made good on his promise and withheld all financial support. Yet Sarah never lost her determination to become financially and emotionally independent from her parents. After leaving home, she became a proof-reader for a large publishing company. During her career in the publishing industry, she rose to a very senior position. Eventually she married, but only after her own career was well established.
Sarah was distinctly different from her sister, Alice. Unlike Sarah, Alice, a Type B housewife, filled the role that Papa had assigned her. She was clearly “Papa’s girl.” Papa’s girl married a local gentleman, a fellow from a lower social stratum who had a high propensity to spend but little propensity to earn an income. In light of this fact, Papa placed Alice, her low-income-producing husband, and their three children on his own special brand of financial outpatient care (FOC). Papa would never allow his favorite daughter to live in a home or neighborhood that was incongruent with his own upper-middle-class image. He heavily subsidized the purchase of a home and accessories for Alice and her family. Significant cash gifts and gifts of securities were bestowed upon “Papa’s girl” annually.
Given these liberal subsidies, one might predict that Papa’s girl would have accumulated a considerable amount of wealth. In fact, she and her husband accumulated very little money during all the years they were on economic outpatient care. Their budgeting system was quite simple: Spend more than you earn and more than you receive in cash gifts. The balance will be absorbed by Papa.
All during this time, Sarah, like many executives (see Table 6-4), received no outpatient care from Papa. Instead, she was punished for her audacity in violating the strict doctrines Papa had set for her.
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When Papa passed away, Alice received no more annual outpatient care, although his favorite daughter did receive the bulk of what was left of his wealth. Sarah received a much smaller amount. She was surprised that she received any part of her father’s estate, especially since he had told her shortly before his death that she would “receive a lot less than Sister.” In his mind, his liberated and very independent daughter had much less need for an inheritance than did her sister, a Type B housewife.
It did not take many years for Alice, the favorite daughter, and her husband to spend nearly all of Papa’s money. Shortly thereafter, Alice passed away. How did her children survive? Their own father did not have enough income to maintain their upper-middle-class lifestyle. Who provided for them? Who paid for their college educations? None other than their aunt, the recipient of no outpatient care, the semi-disinherited Cinderella Sarah. During all the years her father had supported her sister, Sarah had never hardened or demonstrated any animosity toward Alice. Sarah never forgot to send a little gift to Alice on her birthdays. She never forgot to send Christmas and birthday presents to Alice’s children. Sarah is, in fact, a very successful, independent, compassionate woman.
Today, Sarah is a self-made millionaire. She is in charge of her own family’s finances and is in the process of setting up trust funds for her sister’s children and future grandchildren. Sarah feels this is important. Regarding Alice’s daughters, she told us: “They know nothing about money.” How could they? Their role models were their parents, typical UAWS.
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TABLE 6-4 CORPORATE EXECUTIVE—GIFTS AND INHERITANCE: CONTRASTS AMONG THE ADULT CHILDREN OF THE AFFLUENT
PROPENSITY TO RECEIVE GIFTS INHERITANCE
Corporate executives are significantly less likely than the norm for all children of the affluent to receive an inheritance from their parents.
Their propensity to receive annual cash gifts from their parents is significantly below the overage for all adult children of the affluent.
RATIONALE FOR GIVING GIFTS/PROVIDING INHERITANCE
Young executive types tend to demonstrate maturity earlier than others. Thus, their porents feel comfortable in not providing them with significant cash gifts.
Affluent parents often feel that their middle-aged or older sons/daughters who are executives have little need for economic outpatient care/cash gifts or inheritance.
"POSITION" OF SON/DAUGHTER TO PARENTS
It is unclear whether corporate executive types are ony more or less "close" to their parents than other types of children of the affluent. However, limited data suggests that they tend to be somewhat distant in terms of both interaction and choice of residence.
THE STAGE AT WHICH SON/DAUGHTER IS LIKELY TO RECEIVE GIFTS/ INHERITANCE
Corporate executives tend to receive gifts, if any, early in their adulthood. But they are significantly less likely at middle/later stages to receive such gifts.
FORM/TYPE OF GIFTS / INHERITANCE
Those executives who do receive on inheritance from their parents typically receive cash/ financial assets.
Cash gifts for the purchase of a first home often derive from a "college tuition fund" that was substantially overfunded by their parents.
Sarah is a prodigious accumulator of wealth. Even today she is frugal and very well disciplined as a consumer. Her net worth is many times higher than her annual salary as an executive. Sarah told us:
People would be astonished to know how much money I have accumulated....
I know how to hold on to it.
Like many wealthy people, Sarah is in the process of subsidizing the incomes of others, the products of underaccumulating, overconsuming parents.
People often ask us how offspring of the same parents can differ so much when it comes to accumulating wealth. How could Sarah and her sister be so different? We are convinced that some differences exist at birth. Much of the difference, however, can be explained by variations in how parents relate to each of their children.
Papa encouraged Sarah to become a prodigious accumulator while fostering the opposite trait in her sister. In essence, he strengthened the strong daughter while weakening the weaker one. When Sarah left home, she burned her bridges. She received no outpatient subsidies. She had no choice but to learn how to “fish” for herself. And she taught herself very well. At the same time, her sister became progressively more dependent on Papa for his money.
Sarah had compassion for her parents, particularly Papa. He sacrificed much and worked extremely hard to become an affluent business owner. Papa was determined that his children would not have to work so hard and have to face the risk of “doing on their own.” But the willingness and ability to work hard, take risks, and sacrifice were the qualities that made him a successful and affluent business owner. Somehow, like many of his peers, he forgot how he became wealthy.
Many parents say there is nothing wrong with providing outpatient care. This is true, perhaps, if the recipients are already well disciplined and have demonstrated that they are able to generate a decent living without other people’s money. For example, what effect would accepting some outpatient care have had on Sarah once she had taught herself how to succeed, then excel at her chosen field? The answer is probably very little. She was mature enough, strong enough, to deal with money, hers or anyone else’s.
The real tragedy is the helplessness of those who come to depend on outpatient care. Without Aunt Sarah’s kindness, her nieces would likely be terrified of the future. Luckily for them, Sarah is helping. Wiser than Papa, she will provide trusts for these young women. Such financial support will benefit them much more in the long run than would substantial gifts of cash. Some of the funds in the trusts Aunt Sarah is setting up for her nieces are earmarked for education. The rest will not be distributed until these young women demonstrate considerable maturity. Sarah defines maturity as the proven ability to earn a good living. It is not her intention to create another generation of “weak sisters.” Still, Sarah is very realistic about her sister’s children. She realizes it is very difficult
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for teenagers to reorient themselves. It is unclear if her teenage nieces will one day become strong, independent women like their Aunt Sarah. It may be too late. They may have already been too heavily socialized in the consumption and dependent lifestyle they experienced at home. Fortunately, Sarah is a strong role model. She is confident she can have a positive impact on the behaviors and personalities of her nieces. Moreover, the compassion and love Sarah gives her nieces cannot be measured in dollars.
What did Sarah really want from her own papa? Much more than money, she wanted his love and recognition of her splendid achievements. Today, Sarah has few regrets. She never dwells on the past except when speaking of her father. Although Sarah still feels she was never recognized by her father, she will tell you that she capitalized on this need. Much of Sarah’s ambition and drive stem from the need to have her achievements recognized by others. So it is with many Cinderellas who turn some adversity in their early lives into lifetimes of achievement.
THE UNEMPLOYED ADULT CHILD
Like Type B housewives, unemployed adult children are significantly more likely to receive annual cash gifts from their parents than are their working siblings. In fact, our research findings regarding the incidence as well as the actual dollar amounts of gifts received are likely understated, since about one in four male children (twenty-five to thirty-five years of age) resides with his affluent parents, and some respondents did not perceive this living situation as gift giving/receiving. Male adult children, by the way, are more than twice as likely to live at home than female adult children.
Often the unemployed have a history of being in and out of work. Others are so-called professional students. Typically, their parents view these children as needing the money more than their brothers and sisters do, now and in the future. Thus, the unemployed are more than twice as likely as their working brothers and sisters to receive inheritances.
Often the adult child in this category has close emotional as well as economic ties to his parent. He is significantly more likely to live in close proximity to his parents—down the street, perhaps, or even in the same home. It is not unusual, especially among unemployed adult male children, for the child to act as the household handyman, assistant, or errand boy.
The unemployed adult often receives his first cash gift when he shows signs of being unable to maintain or uninterested in maintaining full-time employment.
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Some young adults who receive substantial cash gifts move back home upon graduation from college or graduate school. Others receive substantial cash gifts for housing, food, clothing, tuition, and transportation. The parents often pay for medical care and health insurance as well. Many of these cash gifts come from over-funded college tuition savings plans. When the adult children decide not to continue their educations, there often is a substantial amount of money that is legally theirs. This money is often used to help them maintain a comfortable lifestyle.
Unemployment during the early stages of adulthood is related to unemployment at later stages in life. Many unemployed middle-aged sons and daughters receive direct cash subsidies, often annually. Further, the incidence of unemployment is associated with larger and more frequent gifts. These adult children are also more likely than their brothers and sisters who are employed to receive inheritances in the form of personal real estate.
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