How much is considered generational wealth?

[Anonymous]

My knee jerk reaction is $100m. You need at least enough to fund and operate a family office to have "generational wealth", IMO, which implies the ability to fund trusts in the family tree for more than one generation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In my opinion, if it can easily be spent on basic necessities within a generation, then it's not generational wealth. My parents are leaving ~1 million for grandkids college and another million to my brother and I. Welp that will be more than gone as soon as they hit college and will just help me pay off my house a little faster. Even with 10 million, that would be gone by the next generation considering all the grandkids and great grandkids. Not even enough to accumulate interest. 100 million yes you are getting to a point where it works because assume a ~5% return just living off that, you're drawing $5 million a year and then you can start supporting a good lifestyle for multiple families

Wow, you're spendy! No wonder you're not wealthy despite all your advantages.

LOL seriously

When $2M handed to you as a present is mentally filed under basic necessities that will be gone and done in a heartbeat …

[Anonymous]

Anonymous wrote:My knee jerk reaction is $100m. You need at least enough to fund and operate a family office to have "generational wealth", IMO, which implies the ability to fund trusts in the family tree for more than one generation.

100m is bare minimum for a family office, and even then it may not be a good investment at that level. I'd say $200m.

[Anonymous]

It was more than 2 mil. It was one mil for OP and another mil for each grandkid.

[Anonymous]

Anonymous wrote:It was more than 2 mil. It was one mil for OP and another mil for each grandkid.

This is not generational wealth, and you aren't treating it like you would create wealth from it by investing it. I don't see the relevance to OP's questions. It just sounds like bragging to me.

[Anonymous]

Generational wealth is defined as anything you pass down that is debt free and appreciates in value over the course ofgenerations. In most households, it has been a mortgage-free home or land that can be leveraged to create opportunity in other ways. For rock stars and authors it used to be ownership of copyright that an estate could leverage. Now of course some are selling the rights and investing the cash instead to avoid the possible shift in copyright over years.

[Anonymous]

Back to the OP's question, my gut sense is that 5mil per kid in today's dollars would be a generational wealth enough for a "safety net" that they can then maintain or grow to hand down to their next generation. Obviously if they want to blow it, that can easily be done. My hope is that they'll be responsible but I wont be around forever to safeguard that money.

My husband and I live on half our income so that we can achieve this. We have a good HHI but no family money.

[Anonymous]

Anonymous wrote:My knee jerk reaction is $100m. You need at least enough to fund and operate a family office to have "generational wealth", IMO, which implies the ability to fund trusts in the family tree for more than one generation.

100m doesn't even come close to generational wealth. 100m will bring in around 3m a year, in today's dollars, in perpetuity. Wealth means no one needs to work. Generational wealth means your children, grand children and great grandchildren never need to work. Assuming 2 children per generation, that means generational wealth needs to be able to support 2 adult children, 4 adult grandchildren and 8 adult great grandchildren all at the same time. That is 14 households or 200k per household per year.

[Anonymous]

My grandparents passed away with about a 65m estate. It was divided up amongst the 6 siblings equally with a large chunk going into a charitable trust. each kid got about 7M (with the rest to charity). On top of what my parents had, yes they are totally fine but once they pass that will get split up between 3 of us. So let's say they have 10M, we each get 3M.

Is that life changing, of course, does it cause me to be a waste, no. 60M trickled down to about 3M for me..If my grandparents weren't as charitably inclined, the amounts would be higher but I think that is the most valuable lesson I learned.

To answer OPs question, I think my grandparents fit the bill for generational wealth transfer, but it all depends on how many heirs, charity etc. If my mom was an only child, then of course we'd be set for life..

[Anonymous]

In the early 60’s, mother inherited about $8k from a dear Aunt and my parents used it as a down payment for their house they bought in 1970. I consider that generational.

The generational wealth DH and I received was paying for the part of college that was not covered by scholarships and our own earnings. As a result, we both graduated without loans. That was a real leg up. A few years ago the last of our parents passed. From both sides, in total we inherited about $400k -again a generational wealth transfer.

We are doing the same for our children and a bit more. We have paid for their undergraduate college, started Roth IRAs for them when they started earn some money and gave them a used car that should take them 5+ years post college. We are also considering giving them some money when we sell our house - ostensibly to supplement their savings for a down payment ($50-$100k, our house seems to be worth quite a bit more than we were planning to sell for our retirement).

After that, who knows. It depends on how our retirement investments go. FWIW, our HHI started around $100k when we married nearly 30 years ago and is currently around $200k.

I consider all of the above to be generational wealth.

[Anonymous]

If you paid for your kids college and gave them downpayment help, that’s generational wealth.

[Anonymous]

Anonymous wrote:If you paid for your kids college and gave them downpayment help, that’s generational wealth.

This!
The other posters gabbing on about 100m I'm sure they don't have that! The biggest thing a child can get is a debt free education and the know how to manage money. My father inherited millions, payed for my school, and gave me a car. Then I was cut off. I was taught to save and manage my own money. I have absolutely no idea IF I will inherit anything and NO expectation to get a dime. I don't care at all about this because I have millions of my own. I suppose I inherited good habits to grow money.

Oh, and I drive a Prius. ...to my kids Big 3 school, to my 2nd and 3rd homes, to my $3.5M primary home, and everywhere in between...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:In my opinion, if it can easily be spent on basic necessities within a generation, then it's not generational wealth. My parents are leaving ~1 million for grandkids college and another million to my brother and I. Welp that will be more than gone as soon as they hit college and will just help me pay off my house a little faster. Even with 10 million, that would be gone by the next generation considering all the grandkids and great grandkids. Not even enough to accumulate interest. 100 million yes you are getting to a point where it works because assume a ~5% return just living off that, you're drawing $5 million a year and then you can start supporting a good lifestyle for multiple families

If you paid for your own house and kids' college and invested the $2M your parents are leaving you, then it wouldn't be gone in an instant. It would double every 10 years or so and then be an amount that your kids or grandkids could use the 5% return to supplement their incomes in perpetuity.

Well yes but then you're asking me to sacrifice my own lifestyle which I'm not willing to do. That defeats the entire purpose of "generational wealth" if we're living in a cardboard box and driving a Prius

Oof. You act like you are too good for a Prius.

At some point money has to be used for something

Reminder, in case anyone has forgotten: You can give it to people who need it more than you, even if they are not related to you. On average, it costs $4,500 to save a life: https://www.givewell.org/cost-to-save-a-life . That is, if you give $45,000, there will be on average 10 people alive who would otherwise die. (Yes, this is uncertain; it might be only 8 or might be 12 on average, and there's no guarantee that your specific money will save those specific number of lives, but on average, it's true.)

Giving large amounts of money to someone outside the family is the opposite of generational wealth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My knee jerk reaction is $100m. You need at least enough to fund and operate a family office to have "generational wealth", IMO, which implies the ability to fund trusts in the family tree for more than one generation.

100m doesn't even come close to generational wealth. 100m will bring in around 3m a year, in today's dollars, in perpetuity. Wealth means no one needs to work. Generational wealth means your children, grand children and great grandchildren never need to work. Assuming 2 children per generation, that means generational wealth needs to be able to support 2 adult children, 4 adult grandchildren and 8 adult great grandchildren all at the same time. That is 14 households or 200k per household per year.

Not sure you are thinking about this right. Multi generations not working is one way to think of it but who would want that? I wouldn't.

Even $10 million is generational wealth. That will produce 400k a year forever. If you had two kids that is 200k each. When they dies their kids split that. I know a family like this. They grew up weathly. They now get around 150k a year. Wife is a biglaw partner, husband has a business. 150k a year free and clear is kind of nice. Could you not work? No. But that will afford you a pretty good lifestyle.

[Anonymous]

Anonymous wrote:Back to the OP's question, my gut sense is that 5mil per kid in today's dollars would be a generational wealth enough for a "safety net" that they can then maintain or grow to hand down to their next generation. Obviously if they want to blow it, that can easily be done. My hope is that they'll be responsible but I wont be around forever to safeguard that money.

My husband and I live on half our income so that we can achieve this. We have a good HHI but no family money.

My parents left $10,000 to each of my kids around the time each of the kids were born. My kids now have 40 -45K, and they can't draw the last of it until they are 35 (more than 10 more years). Not big numbers but a big help with grad school or a house downpayment. Even though it's not 5 million, I haven't received a dime from my parents (other than payment of some of my college tuition way back when), so I think my kids will have modest generational wealth.