Money and Mortality

At 74, Warren Syer decided it was high time to face an issue that no family really enjoys talking about: inheritance.

Last summer, the retired publishing executive and entrepreneur, and his wife, Barbara, summoned their four children to their home in Great Barrington, in the Berkshire hills of western Massachusetts, for a rare family conference, without saying exactly why. Over coffee in their comfortable living room with its fireplace and grand stereo system, Warren revealed the couple’s inheritance plan. With quiet pride, he explained how it would assure their financial security, reward favorite charities, and reduce estate taxes. Then Barbara, 72, pleaded with the children to keep heirlooms like her great-grandfather’s marble-topped bureau in the family.

One of their three daughters, Diane Brooks, burst into tears. Her father-in-law had recently died, and she didn’t want to be reminded of her own parents’ mortality. Their son, Kurt, worried aloud that he and his sisters might wrangle over estate decisions, but he was shushed. And after the two-hour meeting, Warren and Barbara felt they had completed a vital mission.

“Will there be resentments?” Warren asked me rhetorically, several months later in the same room. “Of course. When money comes up, there are always resentments.”

Such family conclaves are taking place in more American living rooms than ever before, as the World War II generation hands down an estimated $8 trillion to their heirs, most of them in the baby-boom generation. While inheritance is as familiar a process to old-money families as the sand traps at their country clubs, it is uncharted territory for new-money families like the Syers.

Warren shrewdly took advantage of business opportunities and the post-World War II stock and real estate booms. At one time or another, Barbara and the kids worked in the family businesses. All of the companies have since been sold, and the Syers are now multimillionaires. So the stakes in their estate planning are high, emotionally as well as financially. Like any other challenge, dealing with the division of an estate tests family cohesion. Families that are already at odds will squabble more over money—or retreat into offended silence. Solid ones like the Syers draw closer, and in so doing affirm shared values. For Warren and Barbara, their estate plan has had as much to do with sustaining the values of family, charity, respect for others, and treating people equally as it did with transferring wealth.

Warren Syer, a World War II veteran, epitomizes the old-fashioned ethic that made his generation so dominant in war and peace: hard work, thrift, and entrepreneurship. Syer has prepared his estate as methodically as he used to start businesses and turn around floundering magazines.

Enlisting a formidable team of specialists—financial planner, lawyer, accountant, investment manager, and community foundation—he and his wife structured a plan for a future they will never see. They tried to provide for every contingency: if he dies first, or she does; if their divorced son remarries and takes on the care of stepchildren; if their favorite charities go bust or become for-profit organizations.

In the process, Warren and Barbara collaborated as they had not always done before. During most of their 51-year marriage, Barbara had stayed home to run the household and raise the children, while Warren traveled far and wide—2 million miles, by his estimate—to support them. But the importance of doing inheritance right transcended gender roles. Warren, a classical music buff, says their planning “wasn’t monaural. It was stereo.”

Adds their son, Kurt, 45: “They put in a tremendous amount of work and a fair amount of financial effort to create this package. I believe, in some ways, it’s like having their last child.”

After more than a year of research, conversation, and introspection, Warren and Barbara have learned to tackle the ticklish subject head-on. Rather than let the prospect of death linger unmentioned as we talk in their spacious home, they joke to dispel the cloud. “Everyone assumes I’m going to die first,” Warren says, with a nervous laugh.

“I almost had a car accident this morning,” Barbara adds.

Hard-earned affluence

Despite the Syers’ prominence in Great Barrington, their roots lie in the Boston area. The son of a shoe salesman, Warren graduated from Somerville High School in 1941 and entered Northeastern University, but left college for the war and never completed his degree. In 1946, he married Barbara Gould, a Salem native whom he had met on a summer day when he was 6 and she was 4.

Without family money to boost them, the newlyweds rented a room with a hot plate in Salem, and Warren went to work as a credit investigator for $25 a week. Soon they were hopscotching around the Northeast to accommodate his next job, as a Sears, Roebuck credit manager.

Then he orchestrated his big break—as promotions manager for a new Great Barrington-based magazine about classical music recordings, High Fidelity. Warren had been enthralled by classical music, especially opera, ever since he had seen Jeanette MacDonald singing arias in the movie “San Francisco.”

Working his way up to publisher, Warren received stock options to compensate for a low salary. In 1957, Billboard bought High Fidelity—and his stock. “That was the beginning of my collection of wealth,” he says.

But by no means the end. Warren would cash in stock options twice more, for escalating amounts. At Billboard, he rose to be head of consumer publishing and director of Far Eastern affairs. When ABC bought Billboard’s special-interest magazines in 1974, he sold his stock and joined the network as head of consumer publications.

Restless after retiring early from ABC in 1980, he took over a near-bankrupt Pennsylvania company that published historical magazines. Barbara stayed home while he moved to Harrisburg and put the company in the black. When a Minneapolis firm bought him out in 1986, he says, “that was the best prospering of all.”

Warren had also prospered as an entrepreneur. He had owned a string of discount gas stations that he fortuitously sold just before the energy crisis of the early ’70s. He had opened two coin-operated laundries in Great Barrington and Connecticut, which he sold several years later. He went on to build cable television systems for four Berkshire towns. Warren benefited from rising real estate values as well, paying $18,000 in 1960 for a house now assessed at $294,500. Their growing affluence posed the usual rich-family dilemma: how to provide for their children’s security and prepare them for inheriting wealth without spoiling them.

The children absorbed the work ethic through the family’s various businesses. Their role models included not only their father, but their mother and grandfather. Barbara helped with bookkeeping at the laundries and gas stations, and Warren’s father, Bertram, took care of the laundries. Kurt would count and roll quarters at the laundry, then haul them to the bank. One summer, he cleared land with a chain saw for an access road for a cable system tower. Warren, a student pilot, used to take Kurt along on flights, inspiring his son’s career as a pilot for Northwest Airlines and the Air National Guard.

When she was young, one daughter, Diane, kept the books for the gas stations, useful training for her current job as manager of five McDonald’s restaurants in Connecticut. “We were not ever given a free ride,” says Diane, now 43. Another daughter, Deborah Syer, works for a Kentucky chapter of the National Education Association, and the third, Cassandra Mazzawy, runs a small business in New York.

The children had to work after school and in the summers if they wanted to go to college, because Warren required them to pay for half of their tuition. He’s disappointed that Kurt has not followed this policy with his own daughter, asking her to shoulder only 10 percent of college costs—and even that is negotiable.

Once Warren’s children were in college, he gave them a few shares of stock on their birthday, to teach them about investing. “I don’t feel I’ve done as well preparing my children for the financial world as he did preparing us,” says Kurt. “He definitely made sure we knew the value of a buck. When I turned 17, I said, ‘I want a car.’ He said, ‘That’s fine. How will you pay for it?’”

An even-handed approach

When it came to estate planning, Warren needed an education. After turning 70 in 1993, he began to think about mortality and his family’s future. He and Barbara had already begun reducing potential estate taxes by giving $10,000 apiece per year to their children and setting up educational funds for their five grandchildren.

But they needed a more comprehensive approach. They found it in 1995, when Warren heard Boston financial planner Scott Fithian give a seminar at Fairview Hospital.

Fithian has pioneered what he calls “values-based estate planning.” Unlike some planners who apply technical wizardry to avoid taxes or enrich heirs without examining underlying personal goals, Fithian encourages families to consider all options. His clients write mission statements defining their “family financial philosophy”: how much money they need for their own lifestyle and medical care; how much is appropriate for their children; and how much they want to pay in taxes or give to charity.

Impressed, Warren and Barbara were soon composing their own mission statement. “We feel our first responsibility is to each other, to our own financial security and personal lifestyle,” they wrote. “We believe we have the responsibility to direct the use of a substantial part of our resources to organizations that we feel further our values.” They also noted that “We intend to plan our estate in a manner that will minimize estate tax, allow for sufficient charitable contributions, and pass the remainder of our estate to our four children.”

After considerable self-examination and consultation with specialists, Warren and Barbara hammered these generalities into specifics. First, they addressed their own future, deciding to keep a low six-figure income. Envisioning a time when they could no longer look after themselves, they set aside money for home care instead of buying nursing-home insurance. Next, they set up two family trusts for their children, to lessen estate taxes and, they hoped, provide a lesson in fairness. After Warren and Barbara die, the four children will inherit equally. Kurt and Diane are parents themselves, but Warren and Barbara decided that was no reason to favor them. Nor did the couple set conditions on their children’s spending—except for restricting the divorced Kurt, should he remarry, from passing his inheritance to stepchildren.

“I’m doing it in a way that absolutely treats everyone even-handedly,” Warren says. “I recognize the perils it may cause, but they’re less dangerous than the perils it avoids. They can drink it all up, or go to Las Vegas and gamble it all away. Too much hand-from-the-grave reaching is ridiculous. We didn’t want too much micromanaging for our great-grandchildren.”

This approach was more than an estate planning strategy. It was a philosophy of life, one that Warren and Barbara were hoping to pass on. By not playing favorites, they acknowledged all of their children as independent adults who could be trusted to follow their own instincts. The living-room meeting also conveyed another value—showing respect for others—which was done by sharing the estate plan with the children and seeking their reactions.

Joint trusteeship issue

Whatever their parents want, the children say, is fine with them. As Diane puts it: “We all had the attitude, it’s their money; if they want to spend every penny of it, that’s fine. I don’t feel I’m owed that money. If it’s there, great…. The worst would be to see either of them in a position where they can’t take care of themselves. They’re both extremely active.”

Adds Kurt: “I am trying to plan as if there are zero dollars coming. If this [inheritance] happens, it happens. I see it as putting me from financially okay to financially comfortable. I wouldn’t quit my job or make a big change in my life. My father made it with his. He got nothing from his parents. That’s how I should do it.”

But Kurt does have misgivings about one parental effort to treat the four children equally. Just as they had involved the children years before in the family laundries and gas stations, so Warren and Barbara named them all trustees of the family trusts. Kurt says the arrangement is impractical because he and his sisters all live in different states, and their opinions could clash over an issue like selling the house. He says his parents should appoint an outside trustee.

These tensions surfaced at the living room meeting. When Kurt questioned the joint trusteeships, he says, “my sisters all jumped down my throat.” His father challenged him. “Kurt, if you were sitting here in my chair, what would you do?” he asked. Kurt sidestepped, saying he would need 48 to 72 hours to think about it. He did not raise the issue again. “I was outvoted, five to one,” he says.

Still, his sister Diane now agrees that Kurt may have a point. “We’re all pretty strong personalities, and we’re also all very busy,” Diane says. “The thought of the four of us making joint decisions, getting together to talk about decisions, was really difficult.”

As trustees, the children may some day face delicate negotiations that could test their family bonds and bring underlying tensions to the surface. While it is relatively easy to apportion the Syers’ liquid assets equally, based on value at the date of death, it is harder to divide tangible assets—the house, Warren’s record collection, Barbara’s antiques.

So far, none of the children have expressed interest in living in the family home, so they may sell it after their parents’ deaths and share the proceeds equally. If one child decides to keep the house, he or she would have to buy out the other three siblings. If a child selects a particular record album or antique, its value—as determined in the estate appraisal—will be deducted from that heir’s fourth of the inheritance.

If they bicker, one or all of the children could resign as trustees. The others could choose a replacement, or leave the position vacant. “This is part of their education,” Warren says. “They’re good kids and I hope they can agree. If they can’t, they’ll be smarter” for all the trouble.

Charity as immortality

Eight years ago, Diane’s daughter was born four months early, weighing only 18 ounces. A neonatal unit at a Connecticut hospital saved her life, and that once tiny child now plays soccer with her grandparents.

“She was so little you could put her in the palm of your hand,” recalls Barbara. “In the beginning, I really prayed for her to die. I was worried she would be maimed.”

For different reasons, Warren and Barbara agreed to leave as much as 40 percent of their assets to six charities, including the neonatal unit. For Warren, charity is primarily a vehicle to reduce estate taxes. Charitable contributions are deducted from the estate’s value. Of every dollar given to charity from an estate beyond that level, from 37 to 55 cents would have gone to the government anyway.

For Barbara, charity is an end in itself. It’s also a path to immortality. Their charitable funds will be held in a trust that can last forever. After they die, it will churn out a percentage of its value to charity every year in their names. If any of the charities goes bankrupt or changes its mission, a Berkshire community foundation is to select a substitute.

Warren and Barbara did not choose lightly. Like the neonatal unit, the charities illuminate their emotional and civic ties. Two Great Barrington institutions, Fairview Hospital and the First Congregational Church, stand to be the biggest beneficiaries. And the Syers are helping assure the future of opera, Warren’s passion, by endowing young singers at one opera company and the opera department at a college of music. He declined to name these charities because they have not been officially notified. That same music college could not find room for Warren’s collection of 6,000 record albums, however, and he is resigning himself to the prospect that most of his collection will be sold after his death. “It presents a practical problem, but to me it’s a very emotional thing,” he says.

Barbara is just as emotional about the antiques that have been in her family for generations. She wants the children to begin divvying up the furniture now, but they are balking. Diane says she doesn’t feel the same attachment and would be tempted to sell valuable antiques to pay bills.

“My mom may live forever,” Kurt says. “I have no desire to walk into my mom’s house and say, ‘I’d sure like this when you pass away.’ My little protest is going to be to not pick out something.”

After the living-room meeting, the children scattered to their out-of-state homes. Warren got busy faxing trust and estate documents for them, as trustees, to sign and have notarized and witnessed. Documents pertaining to the charitable trust were the first priority, because the Syers can’t take their contributions as an income tax deduction until the trust is legally established.

Now that he and Barbara have learned to confront the challenge of inheritance and transmit their wealth and their values to posterity, estate planning threatens to join opera as Warren’s favorite hobby. And he’s handing down this avocation as yet another legacy to his son. Kurt, who as a veteran airline pilot is always aware of the possibility of a crash, says he’s going to consult an estate planner too.

Still, with typical self-deprecation, Warren downplays his new-found expertise. “It may be that the only thing keeping me alive is having to finish this damn thing,” he jokes.

Two months later, when I call to catch up on Warren’s progress, he tells me that the estate plan is now legally complete and in effect. He’s expecting another family meeting this summer, celebrating the end of an arduous but satisfying process. There, he says, “We’ll break out the champagne.”

Daniel Golden is a staff reporter for The Boston Globe. This article is adapted with permission from The Boston Globe. �(c)1997 Daniel Golden.How the inheritance is divided

 Using a mission statement to clarify estate plans

Before diving into financial details, family business owners can write mission statements to establish their estate planning goals. In the example below, a husband and wife dissatisfied with their current, vague plan use a mission statement to clarify their objectives, which then suggests possible actions they could take to implement the plan. The example, for a fictitious company, is provided by Scott Fithian of Legacy Advisory Associates in Boston, a consulting firm run by Scott, his brother, and father, which specializes in values-based estate planning.