Most of us who have never inherited great riches might think that such a windfall would last forever. But history tells us that even billion-dollar fortunes can run out — and sometimes in a surprisingly short period of time. The so-called “Third-Generation Curse” has seen some of the world’s wealthiest families rendered destitute in just a few decades, destroying great dynasties in one fell swoop. But some of them are beginning to find a way around this trend.
Of course, there are many reasons why wealth can disappear quickly over a relatively short space of time. For example, while many families made their fortunes during the Great Depression, periods of economic recession can also tear through savings in record time. And that’s before we’ve even got onto the subject of tax.
Shirtsleeves to shirtsleeves
But external factors aren’t always to blame when it comes to families losing their wealth. And there’s a reason that the old adage “shirtsleeves to shirtsleeves in three generations” is popular in one form or another around the world. Essentially, it means that family riches seldom last for long — but why is this the case?
John Werner Kluge
One explanation, of course, is that family fortunes simply become diluted over the years. Take the case of John Werner Kluge, an entertainment tycoon who was once named the richest man in America by Forbes magazine. Back in 1987 he made a staggering $4 billion by selling off his television stations to what would become the Fox Network.
Kluge’s vast fortune, though, was significantly reduced when he divorced his third wife Patricia in 1990, leaving her with maintenance payments of $1 million a year — plus ownership of the family estate. And when she went on to make some poor financial decisions, the couple’s lavish former home was repossessed.