The Vanderbilt Problem: Why Wealth Rarely Lasts

You’ve probably heard the saying:

“Shirtsleeves to shirtsleeves in three generations.”

The phrasing changes across cultures – the British say “clogs to clogs,” the Italians “from the stables to the stars to the stables” – but the meaning is the same.

Wealth that is painstakingly built in one generation is often squandered by the third.

The Vanderbilts are perhaps the most famous example.

Cornelius “Commodore” Vanderbilt built a fortune in the 1800s that, adjusted for inflation, would be worth more than $200 billion today. Yet within just a few generations, much of it had vanished. By the time of the first Vanderbilt family reunion in 1973, not a single one of the 120 attendees was a millionaire.

The data tells the same story across countless families: 70% of wealth transfers fail by the second generation and 90% by the third.

The main culprit isn’t markets or taxes, it’s lack of communication, preparation, and shared purpose.

The Fragility of Wealth

Market volatility and inflation are manageable risks.

The real risk is when money loses its connection to meaning and drifts into entitlement or conflict.

We’ve all seen it or heard the story: first-generation wealth creators who worked 70hr+ weeks, sacrificing and grinding, only to watch their kids grow up with abundance but little appreciation for the work behind it.

Technical Tools That Matter

Some technical approaches that make a difference:

Trusts: Beyond basic revocable and irrevocable trusts that help direct wealth across generations, families can use:

  • Grantor Retained Annuity Trusts (GRATs): transfer appreciating assets at low gift-tax cost if growth outpaces the IRS rate.
  • Qualified Personal Residence Trusts (QPRTs): move a primary or vacation home out of your estate while retaining the right to live there for a set term.
  • Charitable Lead or Remainder Trusts (CLTs/CRTs): split benefits between family and philanthropy, combining tax savings with legacy building.

If nothing else, a trust avoids probate (which can be timely & expensive in certain states) and retains privacy (probate is public record!).

Donor-Advised Funds (DAFs): Simple, flexible, and tax-efficient vehicles for charitable giving. They also offer a way for younger family members to practice decision-making. Donating low-basis stock to a DAF avoids capital gains tax and creates a deduction for the fair market value.

Strategic gifting: In 2025, the annual gift tax exclusion is $19,000 per recipient ($38,000 for married couples). Regular gifting shifts wealth gradually while opening conversations about stewardship and responsibility. In lieu of cash, families can gift low-basis, highly appreciated stock – which, when transferred to children in lower brackets, can reduce overall tax drag (subject to “kiddie tax” rules).

529 Plans: Still one of the most efficient ways to fund education. With recent law changes, up to $35,000 of unused 529 assets can eventually be rolled into a Roth IRA for the beneficiary — turning “college savings” into “life savings.”

Life insurance. Not glamorous, but still effective. Held inside an irrevocable life insurance trust (ILIT), life insurance can provide tax-free liquidity to cover estate taxes or equalize inheritances.

Taken together, these tools don’t just move numbers on a balance sheet — they create structures that protect wealth and preserve family intent across generations.

Key Non-Technical Approaches

While technical planning tools matter, they’re only part of the equation. The harder work is often on the human side – building the skills, health, and character of the next generation, and making sure the family is aligned on the principles that guide decisions.

This is where outside perspective can help. Having a third-party sounding board (like wHealth Advisors!) can take pressure off parents and open up conversations that might otherwise stall. Multigenerational conversations don’t guarantee success, but without them, wealth is more likely to divide than unite.

Families are messy. There are no guarantees. But pairing the right tools with honest conversations gives you a much better shot than leaving it to chance.

Final Thought

The saying “shirtsleeves to shirtsleeves” doesn’t have to be destiny. Families that approach wealth intentionally – as more than numbers on a balance sheet – can break the cycle.

Legacy isn’t about preparing the assets for the heirs. It’s about preparing the heirs for the assets.

So ask yourself: beyond money, what do I want my family to inherit?

The answer to that question may be the most valuable asset of all.

Against Nihilism: Finding Meaning in a Noisy World

Spend enough time online and it’s hard not to notice the cultural shift.

Younger generations are growing up in an environment where information is endless. Despite the abundance of content, there is evidence that we no longer struggle through the fog of complex questions – instead, we seek easy answers, flattening nuance. Many ideas gain traction mostly because they’re polarizing.

What we’re left with are half-baked, clickbait soundbites that lead to “salad bar extremism” – contradictory beliefs that lack coherence.

The result? For a growing number of Americans: outright nihilism.

In one multi-country survey conducted before the arrival of mainstream AI, more than half of young people said they believe humanity is doomed. Three-quarters said the future feels frightening.

Simply put: an entire generation is questioning whether there’s anything worth striving for.

The Lost Battleground of Ideas

I graduated from Rutgers University (Newark) in 2011.

Fun fact: At the time, it was recognized as the most “heterogeneous” student body in America.

I recall my classrooms being battlegrounds of ideas – Marxism vs. free markets in Econ, debates on affirmative action in Management, and even heated discussions about violence in the Quran during Middle Eastern Literature.

In general, college felt like a place where my biases were regularly challenged.

That said, I fear that spirit has faded.

Disagreement, once treated as an opportunity to learn, is now treated as a personal affront – or worse, a threat.

A younger college grad relative once told me, “words are violence” – a comment that gave me pause and felt like the opposite of the ethos captured by Voltaire:

“I disapprove of what you say, but I will defend to the death your right to say it.”

The recent killing of political commentator Charlie Kirk underscores this drift.

Regardless of where one stands on his views, the tragedy is not political – it’s cultural. It reflects how disagreement has shifted from debate to dehumanization, and how we’ve lost the muscle of arguing ideas without attacking people.

Audit Your Inputs

The good news: none of us needs to surrender our minds to the chaos.

Just as our bodies reflect the food we eat, our minds reflect the information we consume. Too many of us treat our information diet like junk food:

  • cheap
  • addictive
  • engineered to keep you hooked

Algorithms don’t care about our wellbeing; they care about our attention. Left unchecked, they hijack our biology and convince us that doomscrolling is a civic duty.

Remember – we have agency over our inputs!

We can:

  • Curate our feeds and unfollow accounts that drain more than they give.
  • Set boundaries on when and how we consume news.
  • Balance passive scrolling with long-form reading, podcasts, and real conversations.

Attention is finite. Spend it wisely.

From Macro Anxiety to Micro Acts of Love

There will always be macro events beyond our control – wars, financial meltdowns, elections, global crises and beyond.

Over-indexing our emotional bandwidth on any of these only breeds (at best) helplessness and (at worst) anger.

Where we do have control is at the micro level. And paradoxically, this is where the most meaning is found:

  • Saying good morning to a passerby.
  • Complimenting a stranger.
  • Checking in on a friend.
  • Going out of your way to make someone else’s day a little brighter.

These may seem small, but they are acts of resistance against nihilism.

They remind us that it really does feel better to give than to receive. The more kindness we put into the world, the more we’ll see it reflected back.

A Better Scorecard

The antidote isn’t to unplug completely or retreat into ignorance (though a short-form information “fast” may be worth trying).

It’s to moderate inputs, reclaim attention, and measure life not by how much outrage we absorb but by how much kindness we create.

Noise will always exist. The choice is how we respond: with nihilism, or with love.