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| Thursday, November 29, 2007 |
| When the family trust trusts too much |
 I find it fascinating to read about inherited wealth. Perhaps it is because I have always had to work so hard for what little I have. But reading about people who have known since birth that they have money and always will have money interests me. A family trust that has sustained not only your parents and yourself, but will be around to provide for your children, grandchildren, and beyond. To literally take money for granted - so much so that you entrust others to care for and grow that legacy nestegg.
This Boston Magazine article: A Stranger In the House of Ayer is just the kind of money story I like to dive into. It has inherited wealth, a vast family trust, and the trusted employee who was stealing from the wealthy employers for a decade or more. Using their wealth to build his own family trust... When Ayer died in 1918, at the age of 95, the Boston Globe described him as New England’s richest man, and the New York Times sketched his rise from a poor shopkeeper to a titan of industry. Neither paper mentioned what Ayer, a fastidious planner (late in life, he took to stowing a bronze coffin in the boxcar of his train, lest his family be troubled by what to do with his remains should he expire en route), had left behind for his family: namely, a fortune of nearly $20 million—the equivalent of $300 million today—and the expectation that it be protected. With that dictate in mind, two of Ayer’s sons placed their inheritance into an investment trust, hoping that, untouched, it would secure the financial future of generations of Ayers.
By last year, the value of that trust had grown to $600 million, and an outsider named Jack Doorly stood watch over all of it. A tall man, thick through the middle and balding on top, Doorly, 56, had worked for the Ayers for most of his professional life, climbing from a position as an entry-level computer operator to president of Essex Street. He oversaw a 10-person team of investment professionals, tax experts, and support staff managing some 300 trust accounts for more than 100 family members scattered around the country. Some had tens of thousands of dollars in Doorly’s care; others, tens of millions.
The details of the family’s investments in government bonds, home mortgages, and real estate crossed Doorly’s desk every day. He tracked debits and credits to the trust accounts on his computer. But he also kept records of his own. A handwritten ledger listed money he had given to his friends and family. There were also documents detailing purchases and projects that the Ayers say they never knew about—things like a Back Bay condo and a Gulfstream jet. I had no idea that trust funds are a Boston area invention (according to the article started by ship captains who had to trust someone back on land to take care of and oversee the family financials).Labels: Money Stories |
| posted by Boston Gal @ 11:06 AM *
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| 8 Comments: |
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There's been a lot of press recently about the Astor clan in NYC too. The son (in his 80s) was just indicted for stealing money from his 100+ year old mother and having her live in squalor while she was alive.
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They're lucky that they found out in such a ahsort amount of time. Others have had money stolen over many years. Hopefully they'll be able to recover most of it.
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Having a person manage your trust isn't insurance that they truly manage it, as evidenced by your story. I would venture this might lead the Ayers to carefully select their next trust manager.
Jerry
www.leads4insurance.com
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Very interesting.
If it takes 90 years to double assets, the rate of return is 0.86% even if the fraud is accounted for. According to the article, "For decades, the family had settled for modest returns on nearly risk-free investments like government bonds." Government bonds since 1926 have had a real return of about 2.3% (SBBI Yearbook 2004). A little bit of spreadsheet magic indicates that the about $500M was spent.
I truly hope that a good amount of that was donated to charities.
Joel
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A guy I knew well in college was part of a very wealthy family and had a $50 million trust opened to him after he graduated college. He also personally inherited two properties in New York and a ranch in Montana, along with various other things worth millions. Plus of course the family itself has tons of money and homes all over the place. I didn't consider the guy a friend, he was a friend of my roommate's. He was constantly high, smoking weed all the time. And he was just biding his time until he got his trust. Basically all he had to do was graduate college, this was a top Ivy League school but he still didn't have to do much work just to graduate. I remember being jealous of him for so long, I thought about how great that would be. But now several years later, having worked hard in my career and reached certain goals I don't know if inheriting wealth would have been better. I make mid-six figures so I'm not struggling, and while I probably will never have the type of money he does, what I do have I know I earned from scratch. Then again it would be nice to own a yacht....
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Well..weather it's $5000. or $500+ Million Doorly was hired to do a job, he stole that money and pretended that it was his. The idea that it was even remotely ok to steal anything for any reason is insane. I agree that to much control and not enough safe guards were in place. That won't be the case now. I think the best punishment for him is going to be....having to work 9-5, living paycheck to paycheck.
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It's not just the ayer family that he's hurt there are many others as well, Including his own son. what I dont't understand is why he has not been arrested for all of these crimes. He deserves to spend some time cooling his heels in a cell.
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Simple...the Family doesn't pursue him criminally it leaves the Feds to be able to charge him. and that will mean triple damages and a whole lot more.
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There's been a lot of press recently about the Astor clan in NYC too. The son (in his 80s) was just indicted for stealing money from his 100+ year old mother and having her live in squalor while she was alive.