Rich Feel Victimized by Irrevocable Trusts
deCourcy, Michael, THE JOURNAL RECORD
WAYNE, Pa. _ Whether the rich get richer was the topic that drew 40 wealthy people into the Wayne town library in one of the old Main Line suburbs that sprang up west of Philadelphia after the rail line to Pittsburgh was laid in 1846.
The consensus among these Main Line millionaires, heirs to fortunes in root beer and department stores, was that no, the rich are not getting richer _ particularly the rich whose ancestors' fortunes are tied up in older trust accounts that give banks nearly complete control over how the money is invested and spent.
Before the 1960s, these irrevocable trusts usually named banks to manage the money for generations, making it nearly impossible for beneficiaries to take their business elsewhere if they were dissatisfied.
Now, partly as a result of the flux in financial institutions, the trusts, whose primary purpose is reducing inheritance taxes, generally provide for the replacement of trustees.
The meeting's organizer, Standish H. Smith, who has $5.2 million in his wife's trust to worry about, is co-founder of a consumer advocacy group called Heirs. Its 150 members are mostly drawn from the Social Register, and their purpose is to make banks release unhappy trust customers.
"This is a crusade, that's what it is," Smith declared.
Smith acknowledged that it has been a challenge to stir up public interest in the plight of the rich, especially since most rich people in these parts don't even talk about money at dinner tables, never mind public meetings.
The focus the meeting was to discuss increases in bank fees, possible lawsuits and legislation. Exhibits told a tale of horror.
Graphs showed that skyrocketing bank fees now chew up $20,000 of the $120,000 annual income from a typical $3 million trust fund. Financial mismanagement was depicted by enlargements of newspaper articles, which described how trust companies auctioned off mansions and 150-acre estates for distress prices in the seven figures.
Like any other group of consumers who feel victimized, these people shared angry feelings of powerlessness. "I just feel controlled by these trust officers," Smith said. "Whatever they want, they do. …