My Story

It All Started with My Great-grandfather, Raymond Foster (1873-1941).

I think of him every time I take an aspirin; Raymond was a marketing genius who worked for the Bayer Company and Sterling Drug for over 50 years, and it was his idea to compress aspirin powder into a dosage-sized tablet. He thought the product would sell better that way.

Raymond was rewarded handsomely for his efforts, and lived a full life before dying unexpectedly of a heart attack at age 67. Fortunately, he had a keen understanding of the financial dynamics in his immediate family, and the foresight to provide for his wife, Alice, three sons, and future Foster generations.

The Trouble with Charlie

Of Raymond’s generational wealth strategy, my father, John Winthrop Foster, says, “Raymond didn’t trust his children with the money – and he was right.” John is referring to his father, Charles Howell Foster, an esteemed English professor at Grinnell College who nonetheless never learned how to balance a checkbook. John recalls with glee that at age 14, he regularly loaned money to Charlie at the end of the month, to tide him over until payday. “I was a teenage loan shark,” John says.

Years later, Charlie “met a guy at a cocktail party who persuaded him to invest in Penn Central Railroad, although most people thought it would soon go bankrupt,” John recalls. “The guy told Charlie that Penn Central had a great real estate portfolio.”

Sure enough, several months later, the railroad went out of business, and Charlie lost all of his investment. “As it turns out,” John says, “a real estate portfolio that’s 30 feet wide and 500 miles long is not very valuable.”

Meanwhile, another of Raymond’s sons, equally bad with money, grew up to own a camera store. It operated at a loss for four decades, staying open only by the grace of cash infusions provided by Alice, his mother.

Skipping Generations

After setting aside a portion of his (cash) fortune for Alice, Raymond passed on two other assets: a large investment in American Home Products stock, and a trust fund for his grandchildren. Charlie and his wife, Doris, had four children. Charlie’s two brothers each had one child.

The trust fund was structured such that Raymond’s children would receive income from it during their lifetimes, but only when the grandchildren turned 35 and their parents had passed away, the principal and retained earnings would be distributed.

“Charlie didn’t have access to the grandchildren’s trust fund, and that’s a good thing,” John says. But he had access to other family money he could invest, some of which evaporated in the Penn Central debacle.

“Don’t Sell This Stock!”

Raymond invested early in American Home Products (which became part of Wyeth), a pharmaceutical and home products company, buying a large number of shares. “Raymond gave Charlie some of these shares and told Charlie never to sell them,” John says.

It was good advice — the stock split multiple times over several decades, lowering Raymond’s effective cost per share from $10 to $.035. In 2000, Wyeth stock peaked at $63.55 per share; the company was acquired by Pfizer in 2009.

Ultimately, the American Home Products stock my father received from Charlie and Doris was the largest component of his inheritance.

Trusts (and Mistrust)

While one part of Raymond’s wealth transfer plan was well conceived, another one wasn’t. Alice, to whom he’d left a considerable amount of cash, suffered a series of strokes after Raymond died, and was incapacitated for more than a decade. There was more than enough income for her care, but Raymond had specified no succession plan in this event. His three sons were never able to straighten this out, and reluctantly went to court.

The court appointed a local lawyer as the conservator of the estate – a lawyer who was a good friend of one of Charlie’s brothers. When it was discovered that the local lawyer was siphoning off money from the estate, “Charlie’s brother said, ‘No, we can’t fire him, I like the guy,’” John says.

Unfortunately, removing the conservator required a unanimous vote of all three sons; a majority vote by two brothers was not enough. As John tells it, “Suddenly, the least-qualified brother had veto power over everyone else.” The conservator stayed on.

The grandchildren’s trust fared marginally better. At the trust’s inception, Raymond had put the money into Hanover Trust, which eventually merged up into Chemical Bank. In the late 1980s, Raymond’s grandchildren were extremely dissatisfied with the bank’s handling of the money.

John says, “The trustee invested it in what he called ‘Chemical’s safest investments’ – which were paying about half the interest as government-insured certificates of deposit. The bank, however, had total control of the money. The inheritors’ hands were tied.”

A Steward at the Helm – Finally

When Charlie and Doris passed away in the mid-1990s, John inherited a significant sum, in cash and American Home Products stock. Almost all of the large amount of money that Charlie inherited from Alice had been frittered away.

But John, unlike Charlie, wasn’t in desperate need of the windfall. He had saved enough money, and profited from his real estate investments, to retire comfortably, even before his parents passed. “The inheritance was nice to get. But it wasn’t essential for me to retire,” he says.

In the years since he received his inheritance, my father has done an extraordinary job as steward of this wealth. He and my late mother did not inflate their standard of living, and they set up a number of trusts to generate income during their lifetimes while securing the future of my family and me. They were committed to passing on their wealth to me, and I am incredibly grateful to John for his foresight and prudence.

John sums up, “I didn’t grow up in a rich family; I grew up in a family that lived hand to mouth. Charlie never had money, and we depended on my grandmother for everything from cars to school clothes. At a very young age I realized that I didn’t want to live like this.”

John never did. And thanks to his wisdom and dedication, I know I won’t, either.

 

Foster Wealth can truly make a difference for your family. Talk to us about your needs today.

 

My great-grandfather, Raymond Foster

My great-grandfather, Raymond Foster

 

John Winthrop Foster, age three

My father, John Winthrop Foster, age three

 

Raymond and John in Northampton, Massachusetts, 1941

Raymond and John in Northampton, Massachusetts, 1936

 

My grandfather, Charles Howell Foster

My grandfather, Charles Howell Foster

 

John and his grandmother at the beach in Maine, 1950

John and his grandmother at the beach in Maine, 1950

 

John and my late mother, Mary Ann Tarr, in front of their first house

John and my late mother, Mary Ann Tarr, in front of their first house

 

John and me on my wedding day

John and me on my wedding day

 

My Family

My family

 

 

“My father, John, has done an extraordinary job as steward of his inheritance.”

David Foster

 

 

 

“The inheritance was nice to get. But it wasn’t essential for me to retire.”

John W. Foster

 

 

 

“Raymond didn’t trust his children with the money – and he was right.”

John W. Foster

 

 

 

 

“Charlie didn’t have access to the grandchildren’s trust fund, and that’s a good thing.”

John W. Foster

 

 

 

 

“The guy at the cocktail party said Penn Central had a great real estate portfolio.”

John W. Foster

 

 

 

 

“Suddenly, the least-qualified brother had veto power over everyone else.”

John W. Foster

 

 

 

 

“The bank had total control of the money. The inheritors’ hands were tied.”

John W. Foster

 

 

 

 

“I didn’t grow up in a rich family; I grew up in a family that lived hand to mouth. I didn’t want to live like this.”

John W. Foster

 

 

 

 

“My father and mother were committed to passing on their wealth to my family and me, and I am incredibly grateful.”

David Foster