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BOOK EXCERPT

11.20.98  
Sharing the Wealth: How Katharine Graham's Father Handled the Washington Post Legacy
Excerpts from The Inheritor's Handbook: A Definitive Guide for Beneficiaries

If you're an adult with living parents, sooner or later you'll face the inevitable day when your parents die, and you must cope with their estate. Today's tax laws, notes Warren, New Jersey, tax lawyer Gordon Millspaugh, all but guarantee that "unless there's appropriate planning, the worst-case situation will happen: The government will take more than 50 percent of your estate, if you're wealthy." So addressing estate-planning issues is a critical matter.

If you take the proper steps early -- say by boning up on estate issues, urging your living parents to write a will, and helping them to draft it -- you'll play a role in these decisions, save tax dollars, and experience the rewarding feeling of exercising control over your destiny. But if you and your parents shut your eyes to the inevitability of death, these critical decisions will most likely be made for you by strangers while you stand helplessly aside.

The Washington Post Story
Before approaching your parents, you need to appreciate not only what they want, but also what your siblings want. Most psychologists, estate lawyers, and financial planners point out that siblings really want fairness -- not necessarily equal treatment -- from their parents. If, say, one child is running the family business while the others show no interest in the enterprise, it's unfair to ask the parents to split the business equally among all their children. Eugene Meyer's transfer of the Washington Post in 1948 is a case in point.

Meyer was a 58-year-old financier with five children when he bought the Post at a bankruptcy auction in 1933. Among his children, only his daughter Katharine, then 16, showed interest in the paper. She subsequently worked there sporadically and often advised her father. But since she was a woman, she wasn't seriously considered as his successor. Her husband, Philip Graham, became the Post's associate publisher in 1946. The following year, the Meyers gave Philip and Katharine a gift of 350 of their 5,000 Class A shares -- the company's only voting shares.

And in mid 1948 Eugene Meyer, then 73, decided to pass control of the Post on to the Grahams. To effect this transfer, Meyer and his wife Agnes gave the Grahams a $75,000 gift to help them buy 4,650 more Class A shares at $48 per share to bring the Grahams' total stake to 100 percent of the company's 5,000 voting shares. Two years later, the Meyers gave the rest of their Post shares to the family foundation, assuring that the family -- specifically the Grahams -- would remain in control.

This wasn't as much of a windfall for the Grahams as it might seem, since at that point the Post was losing money and its survival depended largely on the Grahams' own efforts. Nevertheless, such a gift to one child could have created huge resentments among Katharine Graham's four siblings. So in order to preserve a sense of fairness, Meyer gave an equal amount of money to each of Katharine's siblings at that time.

"There were a few tense moments when my father told them about the arrangements," Katharine wrote in her 1997 memoir, Personal History, "but nothing like the difficulties that were to develop in other newspaper families." Katharine's brother Bill decided at this point to pursue a medical career, and was subsequently given the opportunity to invest in the Post.

Katharine's three sisters responded very differently to identical treatment. "Flo, who was already estranged from the family, was, with some difficulty, reassured by my father that she and her children were being fairly dealt with. Bis and Ruth, who had every right to feel unevenly treated, have remained generous, loyal, loving, and supportive in every way. They were left secure but not affluent compared with my brother and myself. They were never given the opportunity to buy Post stock, largely because it was worth very little in the beginning and was regarded as risky." In effect, Eugene Meyer's gift of the deficit-plagued Washington Post to his daughter Katharine was a gift bearing dubious value and tremendous risk at the time it was made. It became valuable because Katharine and her husband made it valuable -- and her siblings, for the most part, subsequently acknowledged as much.

Author Dan Rottenberg has written seven books, including Finding Our Fathers and Revolution on Wall Street, and also writes for major magazines. He has been a columnist for the Philadelphia Inquirer since 1978.

Reprinted from The Inheritor's Handbook: A Definitive Guide for Beneficiaries
by Dan Rottenberg
Copyright 1999 by Dan Rottenberg
Published by arrangement with Bloomberg Press
All rights reserved.
May not be modified, reproduced, republished, uploaded, posted, transmitted or distributed in any manner.
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