Last summer, I toured The Breakers, Cornelius Vanderbilt II’s summer home in Newport, Rhode Island, with my wife and daughter—both Gilded Age history fans. While they admired the opulence, I couldn’t help but think like an estate planner: how could a family with so much lose nearly everything within a few generations?
A Fortune Built
Cornelius “Commodore” Vanderbilt started with a $100 loan from his mother in 1810, running a small passenger boat. From there, he built a shipping and railroad empire. By his death in 1877, his fortune—about $100 million—was larger than the U.S. Treasury at the time.
His son William “Billy” Vanderbilt doubled it to over $200 million, making him the richest man in the world. But instead of consolidating wealth, he divided it among his heirs. Combined with lavish lifestyles, this decision set the stage for decline.
A Fortune Spent
By the third generation, the family’s focus had shifted from building wealth to spending it. Mansions, yachts, lavish parties, and unchecked philanthropy drained resources. At the same time, the family’s core business—the railroad—lost ground to cars, planes, and trucks.
Without strong structures to preserve and grow assets, even the grandest fortune couldn’t keep up. Within a few decades, the Vanderbilt legacy had faded.
Did You Know?
A 20-year study of 3,200 families by the Williams Group found that:
- 70% of wealthy families lose their wealth by the second generation
- 90% lose it by the third generation
This reality is summed up in the proverb:
“Shirtsleeves to shirtsleeves in three generations.”
Families often fail because they:
- Avoid long-term estate planning
- Don’t adapt to changing markets
- Stay silent about money, leaving heirs unprepared
The Missing Piece: Planning
The Vanderbilts’ downfall wasn’t just about spending. It was about lack of planning.
- Their wealth stayed concentrated in railroads, leaving them exposed when the industry declined.
- They had no enduring trusts or structures to preserve wealth over generations.
- Assets were divided among heirs, shrinking with each generation while lifestyles remained extravagant.
To be fair, many of today’s estate-planning tools—like dynasty trusts, generation-skipping strategies, and family governance frameworks—didn’t exist in their time. But the lesson holds true: without foresight, even the greatest fortunes fragment.
Lessons for Today
You don’t need a 70-room mansion to learn from the Vanderbilts. Protecting your legacy means:
- Plan ahead with trusts and tax-smart strategies.
- Diversify your assets to weather economic change.
- Communicate openly with your heirs so they’re prepared to manage wealth responsibly.
The Vanderbilts left us architectural marvels—and a cautionary tale. In our next blog, we’ll explore how the Rockefellers took a different path and preserved their fortune for generations.
At Staab Law, we help families create estate plans that protect their wealth, prepare their heirs, and preserve their legacy for the long run. Let’s make sure your story is one of preservation, not fragmentation.
Because as Commodore Vanderbilt himself said:
“Any fool can make a fortune; it takes a man of brains to hold onto it.”