By Harry S. Margolis
Some years ago, I became the court-appointed conservator of a man who was worth about $50 million when combining his own funds and those left in trust for him by his parents and grandparents. He was (if my counting is right) the great-great-great-great-great-great-great-great-great grandson of John Winthrop, the first govenor of the Massachusetts Bay Colony. (By coincidence, when I first opened my elder law practice almost 30 years ago, my office was on Winthrop Square in downtown Boston.)
In addition to the founding father of this successful family, many of his other antecedents were quite prominent, including:
- A governor of Connecticut
- Chief justice of Massachusetts
- Prominent New York banker
- Partner in leading New York law firm
One of my ward’s nephews is the current US ambassador to the United Kingdom. His brother is a professor of law at the University of Virginia. A distant cousin was Governor of New Jersey.
One of the many stock phrases about family success (especially about family businesses) is shirtsleeves to shirtsleeves in three generations. One person builds up a family business, his or her son or daughter maintains it, and the grandchildren run it into the ground. So, how did this family avoid that fate?
Of course, we don’t know if it totally did. John Winthrop must have thousands of descendants alive today and they’re certainly not all wealthy nor ambassadors and law professors. But at least this particular line has done well for more than four centuries. I’m sure the family itself could provide more insights, but here are a few we can glean from the record:
- They weren’t always successful. There was almost a century and a half during which my ward’s direct line did not appear to do so well. A John Winthrop who lived from 1681 to 1747 returned to England after some legal trouble in Connecticut and his descendants appear not to be so prominent until his great-great-great grandson Robert Winthrop who lived from 1833 to 1892.
- But they married well. The John Winthrop who returned to England was married to the daughter of a Massachusetts governor. His son married the daughter of a Massachusetts speaker of the house.
- Then they married really well. The Robert Winthrop mentioned above married the daughter of Moses Taylor, one of the financial giants of the mid-19th century. He seems to be the real source of the Winthrop family wealth, which Robert Winthrop maintained or expanded through the creation of his own banking firm and wise investments.
- Wise investments. When working with one of my ward’s brothers on part of his investment portfolio, he seemed to stick to a family ethos of investing almost entirely in stock in well-respected companies. Given that such equity investments have out-performed bonds and other investments over the last century, at least historically this approach has been quite beneficial. In addition, the lack of active trading in the account meant that little taxes on capital gain had to be paid.
Interestingly, the family seemed to move back and forth between Boston and New York over the centuries. It also owns land in South Carolina which was mostly used for hunting, as far as my understanding. They have also been generous to charities, which seems to be a part of the family ethos.
So, is there anything here that can guide us in planning for ourselves and our families, other than marrying well? Perhaps it’s all luck. If you’re part of a really rich family — Moses Taylor’s — the money can last a lot longer. This is especially true if you don’t need to spend the inherited money to live on, since even if it gets split at each generation among the heirs and gets reduced by estate taxes, it can continue to grow through wise investments. This is especially true if each generation earns its own keep. They might not be able to afford to buy hunting land in South Carolina, but if they don’t need to dip into principal to make ends meet, the stock investments can continue to grow through each generation.
