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Sex with strangers. Drug abuse. Mental illness. Among educated twentysomethings reared in the therapy culture, every personal scandal is fair game at the dinner table. Except for one: coming from money.
"Please don't tell anyone about my trust fund, I really don't want that information being passed around," one young New Yorker e-mailed me. "Oh, so I'm the bad guy?" another heir asked warily.
It may sound strange that in the most affluent society in the world, in the richest city in the world, Richie Riches would be ashamed of their inherited fortunes. After all, President Bush repealed the estate tax just for them, the luckiest 2 percent of the population!
A few idealistic young people take a novel approach to the guilt caused by having more than they really need. They give it away, for social change and other good causes.
"My parents started a business that they sold for several million dollars in 1999. They gave my brother and I each a million," says Jamie Schweser, who was then 26. "At the time I got this unexpected windfall, I was doing a lot of independent media and community organizing work. I was really trying to figure out how I could use those resources towards the social justice issues I was passionate about."
Schweser found his way to the Making Money Make Change conference, sponsored by a group of organizations including Resource Generation. The group works with wealthy people under 35, educating them about class issues and providing the tools they need to figure out how to manage their money, including progressive philanthropy. Resource Generation is part of a growing movement among philanthropic organizations to take advantage of the "wealth transfer phenomenon" to increase giving by certain individuals—from boomers to women to young people—challenging them to put their money where their values are. One of the oldest such groups is the Haymarket People's Fund, which since 1974 has funded progressive causes in New England and held conferences about giving for people with inherited and earned wealth.
Schweser, who is now the donor education coordinator for Resource Generation, emphasizes that the organization is not aimed at creating a generation of Robin Hoods. It has reached fewer than 1,000 people so far. To his knowledge, only a few of the people it works with have given away enough of their money to actually change their class status—perhaps because the family, or the family's grizzled financial adviser, intervenes. "My parents refuse to have any conversation with me about giving away more than what seem like token amounts," wrote one workshop attendant in an evaluation. In the face of more conservative attitudes, Schweser says, program participants "break through isolation," learning to be open about their wealth even as they learn about the disparities that drive this country. "I see it as a stepping into a more strategic and powerful use of our resources."—Anya Kamenetz
But America still sees itself as an egalitarian society, and wealth is still a loaded issue. Those who bear the dreaded "trustafarian" tag say they have problems with guilt, embarrassment, and most importantly, figuring out what to do with their lives.
Thomas (not his real name), 25, grew up with a live-in housekeeper in a stately five-bedroom apartment in Brooklyn Heights. His father is a trust and estate lawyer in private practice; his mother retired as a partner in an investment firm. "She worked incredibly hard for 15 years and came away with a very nice nest egg from the boom years of the banking industry," he says. Thomas is candid about the effect of money on his own ambition. He returned home from his New England college a year early, finishing up his degree just this past semester at Columbia. He lived at home for a while, working for Howard Dean's campaign (mostly unpaid) and then selling outdoor advertising.
"I think relying on a future fund is dangerous," he says. "I spent one and a half years starting careers in two industries, politics and sales, that weren't for me. The time has gone by the wayside without me finding out what I do want to do." Now, Thomas works part-time at his father's law firm, just enough to make rent, while applying for new jobshe's currently interviewing at Showtime. His folks are getting a bit impatient. "My parents made their own money. For them it's emotionally nice that they can help me, but I think the flip side of that coin, there's a real fear that a hunger has been removed from the equation with my sister and I. At this age for me there's an emotional health factor in . . . going to a job and getting a paycheck."
The fact is, the very wealthy are not the only young adults who count on a little something extra from Mom or Dad. The baby boomers have emerged as one of the most prosperous American generations ever, even as their adult offspring's dependence has been lengthened by the necessity of getting several years of education for the contemporary job marketnot to mention a dearth of well-paying jobs with benefits.
The Research Network on Transitions to Adulthood, which studies the phenomenon of "emerging adulthood," found that parents provide $38,000 cash, on average, to their kids in years between age 18 and 34, a big increase over previous decades. In a way, we're all trust fund babies.
In the past generation, the increasing polarization of American incomes has created a new class: the super-rich. The number of households worth over $1 million nearly doubled between the early 1980s and the late 1990s. In 2003 two economists at the Boston College Social Welfare Research Institute reconfirmed their 1999 prediction that an astonishing $41 trillion of personal wealth, including assets like real estate, will be bequeathed from one generation to the next over the next 55 years.
Even as lobbyists are now pushing for the estate-tax repeal to be extended past its current sunset of 2010, the financial services industry is preparing for what it calls the "wealth transfer phenomenon." In March 2005, The Wall Street Journal reported on the new "wealth education" programs sponsored by banks like J.P. Morgan and private financial management firms. These workshops, which can cost up to $150,000 per family, are designed to teach children, teens, and young adults the basics of investing and money management.
Just as the average boomer offspring is struggling to make a living, the children of the brightest new American success stories can't be blamed for feeling a little inadequate when comparing their parents' achievements with their own. Thomas's mother is well-known as a pioneering woman in the financial industry. Andrew (not his real name) is the son of a hedge fund manager who "struck gold" in the '87 stock market crash. His father grew up poor, attended Harvard on scholarship, and was "struggling" until the 1980s, living in his mother-in-law's basement. Now he possesses a $100 million fortune. Andrew was raised in Europe and lives in New York, drawing on his trust fund to try to get an American-Italian media business off the ground. Just a week ago, he accepted a job at a film production company in Rome.
Tyler, 21, has a similar story. "I would venture to describe my parents as archetypal New Yorkers," he says in an e-mail from London. His father, who made millions in investment banking, grew up middle-class and worked his way through college doing construction. His mother, born into a working-class family in Anniston, Alabama, came to New York as a Wilhelmina model.