A WORD FROM THE AUTHOR: Hey everyone, I hope you’re having a good week so far. This article has been sitting in my mind for the past week and I thought I’d share over financial plays I’m making this week. If you remember from last week, I covered trading options and started making an additional source of monthly income. As always, I’m not a financial advisor but I enjoy writing about these topics.
I Was Taught From a Young Age to Protect My Dynastic Wealth by Abigail Disney
Can you imagine what you would do with your money if you came into an exorbitant amount by the time you turned 21? Would you spend it on education, travel, or philanthropy? That was the problem, Abigail Disney, heiress to the Disney fortune, encountered when she came of age.
From a recent ProPublica study that examined the wealthiest Americans, many are paying little to no taxes through business restructuring, asset allocation, and tax loopholes. Based on Abigail Disney’s firsthand account, she was left to lawyers, advisors, and bankers.
From her childhood, I’d like to touch on the values she was taught as a child. Through the lens of the role of budgeting, government, and philanthropy.
Budgeting and the Wealthy
When you come into money as I did—young, scared, and not very savvy about the world—you are taught certain precepts as though they are gospel: Never spend the “corpus” (also known as the capital) you were left. Steward your assets to leave even more to your children, and then teach them to do the same. And finally, use every tool at your disposal within the law, especially through estate planning, to keep as much of that money as possible out of the hands of government bureaucrats who will only misuse it.
My main takeaway from the above snippet is that the wealthy think consistently about the future. Having never to spend on yourself means that you’re reinvesting money into your business to let your wealth continue to grow over time. A dollar spent on a depreciating asset could be seen as negligence to the upper class. Disney was taught to think of children and utilize estate planning as much as possible.
Plan for the future with your money.
The Role of Government
Throughout Disney’s essay, there’s a large collection of evidence that the wealthy disapprove of the government taking their money. They will minimize these costs at any means necessary.
“My grandfather Roy O. Disney, who co-founded the Walt Disney Company with his brother Walt, was a fervent believer in this idea. He was so determined to prevent the government from taking any of the money he wanted to leave to his family that he created generation-skipping trusts to end-run the IRS. What he did back then was so effective that most of it is illegal today.”
The government is seen as an entity that poorly spends its tax dollars and does not properly manage projects.
Look to mitigate government influence into your dollars as much as possible.
Philanthropy
My last topic was one I plucked out of the subtext of the article. Most of us yearn to donate generously, giving to churches, causes, and other philanthropic causes.
If you are raised in a deeply conservative family like my own, you are taught some extra bits of doctrine: Philanthropy is good, but too much of it is unseemly and performative. Marry people “of your own class” to save yourself from the complexity and conflict that come with a broad gulf in income, assets, and, therefore, power. And, as one of my uncles said to me during the Reagan administration, it’s best to leave the important decision making to people who are “successful,” rather than in the pitiable hands of those who aren't.
For these folks, there is a point of diminishing returns with philanthropy. Philanthropy can boost your status but only so much. If you’re wealthy and give away your money, what money and status remain?
I disagree with this philanthropy statement of the wealthy and encourage people to donate within their means. Some people have more means than others.
Have a good week.
-Jordan