Keeping It over the generations

[Markola]

OP here. So far, I’m struck by how small so many families are with no prospect of continuing. I thought DW and I were unusual, as my branch of the family dead ends with my gay brother and me.

Second, I’m surprised at how few are aiming to perpetuate their wealth over very many future generations. That seems wise to me, because the bulk of the evidence is that ain’t like to happen anyway!

 

[PatrickA5]

My main concern is that our wealth last for at least my current generation.

What's left over, if anything, will be split between my 3 kids. Based on where the oldest two are financially in their 30's I doubt anything we leave will last to the third generation.

 

[skyking1]

I am far and away the most financially successful one in my entire extended family, but we have no children, so I am torn. It is likely that the young wife will survive me, and she can do anything she wants with the money then. If, however, I am the survivor, I will likely give some to my church, but I'm thinking of giving the bulk to my favorite nephew, who is also childless. I will suggest that, when the time comes, he pick his favorite nephew (preferably childless). That way, there will always be at least one person in the family who is wealthy and can backstop other family members in an emergency, as I have done. And the wealth will not be dissipated among multiple heirs. Eventually, if the line of uncles and nephews continues to grow the wealth, my family might actually achieve some power in the world, which would be a huge change from the historical situation.

I really like your plan Gumby, and you inspire me to think along those same lines. We are devoted to our charities, but that sounds like a wonderful way to share the wealth.
I don't have a favorite nephew but the eldest is also childless and not likely to change that situation, and is a solid guy and an accountant by trade. If anybody could help carry it forward he could.

 

[socca]

My great-grandfather told my dad that he cared deeply about his "legacy", but all that remains from my great-grandfather's life is a trust containing farmland. What's missing? Well, I don't know the first thing about my great-grandfather's mental life. What were his passions? What were his virtues and vices (the latter is usually more interesting )? What were his triumphs and tragedies? In short, despite the trust I'd call my great-grandfather's legacy rather "slim."

 

[Markola]

^^^ Similarly, my great grandfather, who died before my birth, was an ambitious workaholic who seemed to care about his legacy. He seems to have often neglected his family while he owned a couple of pharmacies, was mayor, and accumulated 6,000 acres of timberland. Even though he put the land in a generation-skipping trust, it was all gone by the end of the third generation.

I can say the 3rd generation were not workaholics, lived comfortably and really enjoyed spending it down, and my brother and I in the fourth generation received private school educations, with which we’ve both developed respectable professions. Yet, neither of us have ended up with kids and our own portfolios have been built by ourselves, so I really wonder what he’d think of his legacy after having worked so hard for it? We have appreciated and benefited from his efforts, so that will have to be enough.

 

[Trooper]

I am far and away the most financially successful one in my entire extended family, but we have no children, so I am torn. It is likely that the young wife will survive me, and she can do anything she wants with the money then. If, however, I am the survivor, I will likely give some to my church, but I'm thinking of giving the bulk to my favorite nephew, who is also childless. I will suggest that, when the time comes, he pick his favorite nephew (preferably childless). That way, there will always be at least one person in the family who is wealthy and can backstop other family members in an emergency, as I have done. And the wealth will not be dissipated among multiple heirs. Eventually, if the line of uncles and nephews continues to grow the wealth, my family might actually achieve some power in the world, which would be a huge change from the historical situation.

I like your plan also Gumby. Having no children, we struggle with what happens if the other spouse remarries, and/or the process for dividing the estate after we are both gone.

 

[Cassius King]

I'm not sure as to what we'll do. I'm leaning towards spending it on a forever home for the wife and I and lot's of travel. If there's anything left, then it can go to our two kids.
Wife and I both come from nothing, we deserve to enjoy some of the results of our hard work and dedication.
We provided both of our kids a childhood that wife and I would have dreamed to have. We gave them the foundation, what they do with it from here is entirely up to them.

I'm ready to turn the focus on my wife and I and live our best lives.

 

[Jeffman52]

Interesting thread. I am by far my richest relative. Possibly the only one in my family to even accumulate $1M much less more.

So what to do when we are both gone? We have told both children we plan to spend every penny and bounce our last check just before we die. But the reality is that there is a good chance for there to be a substantial inheritance. Frankly there is no way to ensure that this inheritance isn't squandered away. So we will do what we can while we are here. Get the Grandchildren into private school, pay for their college or technical schools.

I guess the single most thing I want to avoid is empowering them to not be independent and instead to rely on a future inheritance as their safety net. Same with the Grandchildren.

I say that because on my ex-wife's side, there was some property and some money (nothing ground breaking to me, but seemed like a lot to those living on the edge.) Their Grandson had the gall to ask for his inheritance early so he could buy a Jeep. After they passed a few years ago, their have been a few nice vacations. Some new cars. Squabbling over the property. And the money is now all gone.


That is what I hope to avoid.

 

[LateToFIRE]

Noticed a number of posts on this thread where folks are the wealthiest members of their extended families - very interesting. Same in my case as well. In fact I'd bet DW and I have NW that is probably equivalent to all our extended family put together and then some. Probably next in line is BIL who is a lifetime subscriber to LBYM, who I am pretty sure has squeaked past the $1M NW mark having been boosted by recent inheritance, and a couple of cousins who's public service pensions could be valued $1M. There are some younger family members living nicely on middle-class and maybe even upper-middle class incomes, but those same folks are big spenders and live in HCOL areas, so questionable how much they've actually accumulated. I think most are living their paycheck to paycheck "best life" based on Insta/FB disclosures. So, this all puts DW and I in an awkward position at times - very much downplaying our relative position, but also clearly sensing some envy and resentment at times. Human nature - can't be avoided.

 

[Lsbcal]

In Paris right now and having a good time. I am trying to spend and avoid worrying too much about the tab totals.

Rest will go to our DS upon expiration of yours truly and DW. We helped DS and daughter in law get their first house . They are doing fine with our current 1.5 grandchildren. … one currently in the oven

 

[jollystomper]

I am not sure what, if any of what we have we choose to leave to our kids will last beyond them. While they are financially independent of us, none have picked careers (yet) with great income potential. They do live within their means. I can see whatever we leave them being used by them. But who knows. One son who does have children might be the most likely one to try to sustain something for his children. But in truth, it is not something DW and I dwell on.

 

[Stormy Kromer]

My primary goal as a parent was to teach my two children to be productive and responsible with money. So far so good, each is educated and financially independent and saving for retirement in their 20's.

That said, I really want to leave the and their families a significant inheritance to ensure financial stability. I think of someone in the family dealing with a potential tragedy, early death or serious illness or getting stuck in an abusive marriage. I want them to handle the situation without worrying about money. I've also encouraged them to do the same for their future children.

DW and I reached FIRE status 100% on our own efforts. Since then we've each inherited some farmland which we rent out. (owning this land was actually more work and trying than reaching FIRE status on our own working elsewhere, but that's other thread.)

Farmland that's been in both our families 150 years or so. It wouldn't bother me so much if they spent a pile of the $$ that they'll inherit, but I've tried to tell them to keep the land. It will be split into separate parcels as even as possible. When I've seen land left to heirs undivided it usually gets sold within 3-5 years.

I don't want to rule from the grave, but I do want to tell them of our wishes.

 

[luckydude]

Multi-generational inheritor here.

DW and I have inherited a pile and made another big pile of our own, with another big pile of inheritance on the horizon.

We expect that by the time of our demise, our estate will easily be in the mid-8 figure range and likely well into the upper 8-figure range. We've done all we can with respect to estate planning, but a big chunk will still eventually go to Uncle Sam.

We have two kids to inherit our estate. Both are still in HS and show signs of fiscal responsibility and financial acumen. If they manage the estate sensibly, we expect that our wealth will last another couple of generations.

Relative to my extended family, our NW is around average. I know of several relatives whose NWs dwarf ours.

 

[street]

Multi-generational inheritor here.

DW and I have inherited a pile and made another big pile of our own, with another big pile of inheritance on the horizon.

We expect that by the time of our demise, our estate will easily be in the mid-8 figure range and likely well into the upper 8-figure range. We've done all we can with respect to estate planning, but a big chunk will still eventually go to Uncle Sam.

We have two kids to inherit our estate. Both are still in HS and show signs of fiscal responsibility and financial acumen. If they manage the estate sensibly, we expect that our wealth will last another couple of generations.

Relative to my extended family, our NW is around average. I know of several relatives whose NWs dwarf ours.

That is a chunk and congratulations.

 

[LateToFIRE]

Multi-generational inheritor here.

DW and I have inherited a pile and made another big pile of our own, with another big pile of inheritance on the horizon.

We expect that by the time of our demise, our estate will easily be in the mid-8 figure range and likely well into the upper 8-figure range. We've done all we can with respect to estate planning, but a big chunk will still eventually go to Uncle Sam.

We have two kids to inherit our estate. Both are still in HS and show signs of fiscal responsibility and financial acumen. If they manage the estate sensibly, we expect that our wealth will last another couple of generations.

Relative to my extended family, our NW is around average. I know of several relatives whose NWs dwarf ours.

WELL... you've certainly provided a very good example of generational compounding . It's a real thing.

 

[luckydude]

That is a chunk and congratulations.

Thank you street. Unfortunately a bigger pie entails more work in money management, estate planning and tax preparation, and it does get rather more complicated and time consuming. Outsourcing some of this stuff has helped but not as much as I expected.

 

[Markola]

^^^^luckydude, you are aptly named! Thanks for chiming in and sharing as a rare example of a family defying the 3 generations curse.

I have observed wealthy families gather around a family foundation as one way to hang together. Board seats rotate and younger members are brought up to value family history and cohesion. Is that the case with y’all?

 

[sparky08]

I have one daughter, and she and her DH decided not to have any children. She's 45 years old now so I guess that's that.

Same here. Although my daughters' pets might be well taken care of!

 

[Milkman]

Even though the majority of our net worth came by way of saving it one paycheck at a time, I did inherit money from my father (gave all dividends and interest to my step mom until she died 10 years later) and also from my aunt (was her conservator for 6 years, then split the estate evenly with my two cousins). Therefore, I am second generational wealth for a portion of my net worth and first generation for the majority of my NW.

Knowing full well that family money seldom lasts longer than three generations, I have set up the following arrangements. If I go before my wife, she gets the RMDs from my T-IRA until she passes, while the principal stays intact. The rest gets split evenly between the Church Endowment Fund, my two daughters, and my two grandchildren. My daughters, who are in their mid 40s, get access to their portion right away based on when my wife passes. The grandchildren don't get a penny until they are 40 years old. The exceptions would be education and catastrophic illness.

 

[MaxFIRE]

OP here. So far, I’m struck by how small so many families are with no prospect of continuing. I thought DW and I were unusual, as my branch of the family dead ends with my gay brother and me.

Count me as another. We have no kids, and do not (and will not) have nieces or nephews. My DW is an only child, so that leaves my younger sister, provided she does not precede me in death.

Our cousins would be next, but I don't know any well enough to be comfortable with giving any large sums. So in reality, the bulk will likely go to causes we choose.

 

[luckydude]

^^^^luckydude, you are aptly named! Thanks for chiming in and sharing as a rare example of a family defying the 3 generations curse.

I have observed wealthy families gather around a family foundation as one way to hang together. Board seats rotate and younger members are brought up to value family history and cohesion. Is that the case with y’all?

Thank you Markola.

I am doubly lucky in that both of my parents came from wealthy familes so I got a piece of a pie from each parent. Neither family has a foundation; each is an on-going privately held family business run by a group of family members. In each case, it is the family business that holds the family together.

Based on my observation of my extended family members, inheritors generally fall into three categories.

In the first category, inheritors launch their own successful business (sometimes with seed money from the family) or lucrative professional careers and are able to accumulate wealth on their own to add to the pile they inherit.

In the second category, inheritors live off the pile they inherit. They don't build on it but they don't squander it either. They live within their means and are able to pass it on to their heirs. The problem is that as the pile is passed down to each succeeding generation, it gets progressively smaller as it is divvied up by heirs or subjected to estate tax, so that the wealth is dissipated over time even without profligate spending or bad investments.

In the third category, inheritors squander the pile they inherit through profligate spending or ill-advised investments.

I would say in general most inheritors in my extended families fall into either the first or second category, and then there are the black sheep who blow it all and are shunned by the family and excluded from family gatherings or events.

 

[ncbill]

My primary goal as a parent was to teach my two children to be productive and responsible with money. So far so good, each is educated and financially independent and saving for retirement in their 20's.

That said, I really want to leave the and their families a significant inheritance to ensure financial stability. I think of someone in the family dealing with a potential tragedy, early death or serious illness or getting stuck in an abusive marriage. I want them to handle the situation without worrying about money. I've also encouraged them to do the same for their future children.

DW and I reached FIRE status 100% on our own efforts. Since then we've each inherited some farmland which we rent out. (owning this land was actually more work and trying than reaching FIRE status on our own working elsewhere, but that's other thread.)

Farmland that's been in both our families 150 years or so. It wouldn't bother me so much if they spent a pile of the $$ that they'll inherit, but I've tried to tell them to keep the land. It will be split into separate parcels as even as possible. When I've seen land left to heirs undivided it usually gets sold within 3-5 years.

I don't want to rule from the grave, but I do want to tell them of our wishes.

One set of my spouse's grandparents back in their early 60s broke up the farm & transferred parcels to the kids.

Nothing so fancy as a life estate...it was just understood the kids would pay the minimal taxes & grandparents the utilities & major upkeep (e.g., new roof) as long as they lived there.

After grandfather died, she moved into the home of her youngest daughter. So while the daughter's kids were still young they got to spend years with their grandmother.

Our youngest is already talking about me (never mentions my spouse for some reason) moving into an ADU on their future property.

 

[marko]

IMO, one of the reasons for a "shirtsleeves to shirtsleeves" situation is that the assets are physically transferred to the next generation, which leaves the success or failure up to the skills and predilections of each individual.

In my case, a portion of my quarterly income derives from a man who died 30 years before my mother was born (I'm 71). Evolving over time, through a series of trusts etc, it has been professionally managed since the 1940's, supports several beneficiary families and, from what I can see, continues to grow a balance.

Fortunately, the families supported have gotten smaller over the years and the pain of each cousin's funeral is mitigated with the thought that a small 'raise' is on the horizon. "Cousin Jimmy just died! Oh no! Oh yes!"

 

[dunkelblau]

I guess I may be considered third generation in a manner of speaking.

If the bar sits at a nominal 1M USD, my grandparents reached that in the early 1990s, parents in the mid 1990s, and the earliest of my generation in the late 1990s. My parents received no financial help at all from their parents, but they gave me and my siblings a head start; in my case it probably accounts for ~20% of my current nut. So I'd say these were more like independent events than each generation building upon the assets of its predecessor.

Still I think these aren't fully independent, because I believe they all share a common root cause, namely a mindset around financial management that favors accumulation. But results haven't been uniform, as the first of my generation to hit target later completely blew up his share plus most of his own net worth on ill-fated real estate investments. So while we may have similar motives for growing our net worth, our attitudes towards risk management vary.

I might be considered a candidate for the previously discussed notion of having an older single childless member handle all of the family money, but I think this is not a good idea due to (1) concentration risk and (2) differing views about what constitutes good stewardship. You never know if the family jewels may end up in the coffers of some cult or if a major lawsuit wipes it all out. And my siblings and I have such different approaches towards investment policy that we don't discuss finances at family gatherings. My parents are doing equal shares, and so am I (amongst siblings). I would decline any request to serve as repository of family money -- it's not my circus.

It's still too early to tell, but the generation after mine should be able to at least match ours, provided that our attitudes towards earning, saving, and investing all propagate. I don't know how to influence this much beyond paying for their education and living the example that we set. I think this matters more than whatever $$ head start we provide them.

 

[Markola]

^^^^dunkelbau, See the post from marko just prior to yours. Maybe a trust would do the trick best?