Gloria Vanderbilt: No Trust Fund Kids for Her
A tenet of the American dream is that children grow up to earn more and have a better standard
of living than their parents. Traditionally, upward mobility in America is achieved through hard
work and the growth of the economy. Intergenerational wealth transfers are also widespread,
with around 2 million households each year receiving an inheritance or a substantial gift,
according to a Federal Reserve report.1 Those transfers are set to grow over the next couple of
decades as baby boomers pass down $84 trillion to the next generation in what is being called
"The Greatest Wealth Transfer in History."2
But not all parents are committed to leaving an inheritance to their children. Some, including
Gloria Vanderbilt, believe that kids should make their own money and earn their own success in
life.
Vanderbilt Heiress Makes Good on "No Trust Fund" Promise
Gloria Vanderbilt, the great-great-granddaughter of railroad and shipping tycoon Cornelius
Vanderbilt, inherited a trust fund worth an estimated $2.5 - $5 million in 1925 (close to $35 - $70
million today). She was worth an estimated $200 million at the time of her death in 2019.
In a 2014 radio interview, Gloria's son, CNN host Anderson Cooper, said she made it clear to
her three children that they should not expect a trust fund from her. Cooper called inheriting
money a "curse" and an "initiative sucker" and questioned whether he would have been so
motivated if he felt like there was a "pot of gold waiting for me."3
It is a fair question to ask, given his family history. Cooper's grandfather, Reginald Vanderbilt,
was a reputed gambler who had squandered most of the family fortune by the time he died in
1925 and left the remainder to Gloria.
Yet as Cooper pointed out, his mom, who had a successful career in the fashion industry, made
more money than she inherited. Gloria started a denim business in the 1970s that was
reportedly worth $100 million. In a 1985 interview with the New York Times she said, "I'm not
knocking inherited money, but the money I've made has a reality to me that inherited money
doesn't have."4
Although Cooper ended up receiving $1.5 million from Gloria's estate, his net worth prior to his
inheritance was thought to be more than $100 million, so he can hardly be labeled a trust fund
kid. But while he did not inherit a fortune, he does appear to have inherited his mother's work
ethic. In addition to her denim line, she worked as a model, an actress, and an artist - all while
balancing her duties as a mom.
"We believe in working," Cooper said when discussing his mother's trust fund stance.5
Lessons Learned from the Vanderbilt Heiress
Gloria Vanderbilt did not go the route of super-rich parents like Warren Buffet, Bill Gates, Mark
Zuckerberg, and Michael Bloomberg, who have vowed to donate their fortunes to charity.
However, she did make good on her promise of not leaving a trust fund to her kids, which
studies suggest can be a wise choice.
Research from the Williams Group wealth consultancy found that 70 percent of wealthy families
lose their wealth by the second generation, and 90 percent lose it by the third generation.6 A
survey by U.S. Trust found that only 42 percent of high-net-worth individuals have a high degree
of confidence that the next generation is financially responsible enough to handle an
inheritance.7
The Vanderbilt family presents an interesting case study - and counterpoint - to this familiar
narrative of heirs squandering the family fortune.
By the time the Vanderbilt fortune built by Cornelius, a man richer than Bill Gates in his day,
reached Gloria four generations later, it was nearly gone. But despite receiving a trust with
enough remaining funds to live comfortably on, her inheritance did not dull her drive for hard
work and achievement. Gloria's son Anderson Cooper also had a strong work ethic from a
young age. He interned at the CIA while studying at Yale and went on to become one of the
most recognizable faces in media.
Experts say the main reason why fortunes are squandered is because those who create the
initial wealth do not pass on detailed instructions or impose guidelines on how heirs should
spend it. Attitudes towards wealth need to be shaped and inculcated. This can be done
informally - say, by teaching kids sound money habits and providing a good example - and
formally, such as through trusts that specify how and when the money can be used.
Arguably, not leaving an inheritance can be a great motivator for loved ones to find their own
path forward. Money cannot buy happiness, and having a trust fund or substantial inheritance
does not guarantee that heirs will be successful.
Parents know their children best. They also know that what is good for one kid may not
necessarily be good for the others. While one child may manage their inheritance independently
without issues, another may need safeguards and incentives.
Wealth management and estate planning go hand in hand. When advising your clients how to
achieve their financial objectives for the next generation, you may suggest that they could
benefit from advice about how to structure a plan in ways that help preserve generational
wealth. To collaborate with our estate planning attorneys on a wealth management strategy for
your clients, please get in touch.
MEREDITH | PC
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Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
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