CORRECTED-YOUR MONEY-A little honesty might preserve the family fortune
(Corrects stock symbol for U.S. Trust to reflect its ownership by Bank of America Corp rather than Charles Schwab Corp)
By Chris Taylor
NEW YORK, June 17 (Reuters) - When Stephen Lovell used to visit his grandparents as a kid, it was like entering the world of Cole Porter or "The Great Gatsby."
People dressed in tuxedos and sipped cocktails. They owned boats, airplanes, a hobby farm. Not to mention a lavish mansion in Ontario, Canada, and a summer home in Southampton, New York.
He estimates that his grandfather, who founded the John Forsyth Shirt Co, had a fortune of at least $70 million in today's dollars. But through a combination of bad decisions, bad luck, and alcohol dependency, the next generation squandered that money.
"I think about it all the time," says Lovell, a financial planner in Walnut Creek, California.
Indeed, 70 percent of wealthy families lose their wealth by the second generation, and a stunning 90 percent by the third, according to the Williams Group wealth consultancy.
U.S. Trust recently surveyed high-net-worth individuals with more than $3 million in investable assets to find out how they are preparing the next generation for handling significant wealth.
"Looking at the numbers, 78 percent feel the next generation is not financially responsible enough to handle inheritance," says Chris Heilmann, U.S. Trust's chief fiduciary executive. Continued...