Keeping It over the generations

[Markola]

There are fascinating threads going on Wealth Accumulation and on Stealth Wealth. Many of us are so uncommonly good at “not eating the marshmallow” and are more able to sit and watch it grow. I’m curious how people here think about the very long term. It’s a truism across many cultures that wealth lasts three generations, “Shirtsleeves to shirtsleeves in three generations.”

Here’s one article that describes the 3 generations phenomenon and advises professional facilitation.
https://www.rbcwealthmanagement.com...eating-the-shirtsleeves-to-shirtsleeves-adage

For us, we have no kids and are interested in creating a philanthropy plan to create an endowment somewhere with whatever might be left as a way to keep our nut together and growing long-term. How do others think about perpetuating what they’ve built up, or not?

 

[LateToFIRE]

Similar situation to yours - our estate plan leaves a significant portion to charities we care about in hopes that will do good well beyond our lifetimes. As for family, we plan to help the next generation sooner rather than later so that they are not waiting for us to die off, and really because it will make a much bigger difference to them to receive small amounts of help early in their lives. And, also so that we get to see the fruits of that assistance. Would note though, we've learned to be very cautious about letting the youngsters feel like they are making their way on their own - we provide the safety net and the occasional significant boost only when absolutely needed.

 

[LateToFIRE]

By the way, have seen that three generations phenomena in my own family legacy and have heard many stories from others. It only takes one less than stellar heir to blow it all. But, the good news is that the next generation after that has a better than even chance of recovering (owing to class/cultural inheritance).

 

[HawkOwl]

Not to take this on a tangent, but a related topic is shrinking family size. My grandparents had six children, fifteen grandchildren, and only five great grandchildren. On the one hand, it tends to concentrate any family assets held by previous generations. On the other, if my only child doesn’t have a family of her own, the idea of a “three generation phenomenon “ is moot, because there will not be a third generation.

 

[pb4uski]

While 93yo DM is still living, when she passses her wealth will pass to her 5 children. When the second of us passes our wealth will pass to our two children.

I haven't given it much thought other than that, though I probably should since with some inheritances from DM and two aunts who do not have any children the estate may be much larger than it is today.

I do have an endowed scholarship at one of both of our alma maters or perhaps a family scholarship program in mind.

 

[pacergal]

If all goes as planned, we will likely have a modest chunk for our kids to inherit, part of that may be a small amount left from my folks.
What comes from us will hopefully allow our kids to have a nice retirement, but probably not enough for the next generation.
Retired only 6 years at this point, so who knows what the future will be?

 

[jebmke]

No kids either. We will give away to charity as much as we can before we croak.

 

[TheWizard]

No, I haven't and don't intend to get concerned about what happens to my modest wealth accumulation once I'm gone.
If my various heirs fritter the money away, then that's the way it goes.
Phil Ochs even wrote a song about it...

 

[W2R]

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.

 

[flyingaway]

If were in your shoes, I would focus on spending more money to have fun when I am still alive.

 

[Gumby]

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.

 

[Markola]

If were in your shoes, I would focus on spending more money to have fun when I am still alive.

You are right, of course, and we are doing that. The plan calls for spending down toward a portfolio danger zone until SS at 70, at which point the portfolio starts growing again. So, I feel we are stepping on the gas but also maintaining a safety margin.

 

[aja8888]

I have one living daughter. Her sister passed away at 22 in 1999 and was not married. My daughter and her husband will not have any children so my legacy ends here (have no brothers, just one living sister). My father had no brothers so our family's last name will not carry on.

My daughter will get it all, whatever it is when I check out. No real need to plan much.

 

[monte1022]

I have one living daughter. Her sister passed away at 22 in 1999 and was not married..

I am sorry for your loss.

 

[aja8888]

I am sorry for your loss.

Thanks, it was a long time ago, but it still hurts. It was the worst day of my life.

 

[2017ish]

Our two closest couples friends kept working a few more years to set their grandchildren up (Retired at 60 vs. 55 or so). We did not choose to work longer to do that, and still do not have generational wealth on our bingo card. (Helps that one of our kids/spouse makes very good money for SFO tech people, and another is also well set; we educated them, which seems to be sufficient.)

For us, the key planning criterion was having a "safe" amount to get DW to 105 under conservative assumptions. Naturally, there may well be $$ left over at the end, but our kids know not to count on it, and we are not interested in optimizing that possibility....

 

[street]

Finally, ~7 months ago we got our first and most likely the only blood GD. My wife has one sister, and they are poorer than church mice. II have one half sister so family is so small.

My hope is to give my son the inheritance of land and portfolio when we are gone. We will need to get things in order at some time and our hopes how in how we want things to happen.

 

[Markola]

^^^^ Congratulations Street and Mrs. Street!

 

[FlaGator]

Approaching my mid-60's with two under the age of 23, my focus is getting them to a point where a next generation is even a possibility. I'm not worried about grandkids frittering away what's been accumulated. If they wait until their 40's like we did, I'll be lucky to see any, and if I do, to remember their names

I believe there will be more than a trivial amount left when I go. Between the thrift they learned under my guidance, and the overhang of their late mother's message about frivolous spending, I bet there will be something left when they expire.

I won't be around to judge, just hope there is fun along the way, and they can leave their kids (if any) in as good a shape as I left them.

 

[DrRoy]

We have two sons, but expect no grandchildren. Pondering this issue.

 

[old medic]

My father had no brothers so our family's last name will not carry on.

My father was an only child, had 5 children with only me having a son, who has the only son to carry on the name.
Stepfather's name will end with my brother....

 

[target2019]

I started thinking about generational wealth in 2014-15. This is a thread I opened:

Multi-Generational Investing & Finance https://www.early-retirement.org/forums/f27/multi-generational-investing-and-finance-81226.html

In that thread I posted links to articles written by James Hughes on this subject. His site and book are good resources.

A legacy fails for several reasons. My great-grandfather started a business which employed his sons, and they then managed the business. When their sons became involved, corruption and other things surfaced. The business no longer exists.

Our legacy is an account that two parents and two children have participated in. The amount has grown 4X since 2018. Parents have contributed the most.

So, Hughes describes measures that should be in place, so that the legacy is not abused and squandered. One key point is that the children must evolve to understand their responsibilities. So, it's not a bottomless cup that they can use for trivial matters. If a child shows irresponsible behavior, then you limit, or just don't, invest in their wild ideas.

Another thing I've uncovered is that an account like this can have built-in answers for children who want to borrow money. We've used it several times to fund loans which we all agree are very good ideas. But when it comes time to mortgage someone's home, well, there's a mortgage lender out there who will be very interested in lending to you at 7% for 30 years.

In our case it's not a formal entity. It's a concept that we all understand. If you take (*borrow*) from this wealth, then it's expected you'll eventually contribute back some amount. If you don't, Ok. There will be less to inherit.

I hope that when I depart they will see the account as something to jointly manage, and use to grow the 3rd generation.

 

[misanman]

We have three children and ten grandchildren. The three couples have good jobs and are doing well financially. All ten grandchildren seem to be on track for success as well with partially funded 529 plans (two graduated and employed, three currently enrolled, one deferred, and four are younger). So adding our wealth won't make a huge difference in their lives, but probably can't hurt.

 

[rk911]

...For us, we have no kids and are interested in creating a philanthropy plan to create an endowment somewhere with whatever might be left as a way to keep our nut together and growing long-term. How do others think about perpetuating what they’ve built up, or not?

we're in the same situation. we do have one nephew who will inherit a portion of our estate but the bulk of it will go to charity or possibly fund an endowment, etc. just starting to think about this.

 

[Gallaher]

Anything I leave my kids will be burned up in consumer spending in a few years. I can’t understand their consumerism. They did not inherit any level of frugality.
Worse, they don’t even vote! They are not apolitical just uninterested. They are adults 40,30, 28.
Wife and I started with nothing worked, saved and invested to get where we are. Can’t see having my kids squander it.
Half to a faith based charity. Kids can split the balance.