Generational Wealth

[Anonymous]

^ so 100M or so to start with.

[Anonymous]

It’s not a number. It’s stuff like paying for college so there’s no loans, paying for the house down payment, then the kids inheriting money, property, etc.

[Anonymous]

Anonymous wrote:Generational wealth means that the oldest generation leaves behind assets for the next generation to inherit and so on and so on. In other words successive generations dying with more than 0.

I understand that is a literal reading, but I don't think that's what people mean. My grandparents leaving a $200k home to be split between their 6 kids did not create generational wealth. My ILs paying for college for grandkids arguably would, because it frees up money in my (parent) generation and launches the next one (grandkids), giving both generations a significant boost.

[Anonymous]

So by what most in this thread are saying, your typical biglaw partner would be what comes to mind when you hear the phrase generational wealth?

[Anonymous]

Anonymous wrote:So by what most in this thread are saying, your typical biglaw partner would be what comes to mind when you hear the phrase generational wealth?

Not at all. We’re scientists, and early Apple investors.

[Anonymous]

Anonymous wrote:People throw around this term a lot.

What number is usually meant by it? How much we talking?

I think any reasonable number with the right guardrails should work, no? Say you have $10M (50/50 brokerage vs IRA) net worth at 67/62 with kids that are 26/24. If you put that $5M in a irrevocable trust where the trust pays out no more than 3% of its value each year, equally distributed to all beneficiaries (say, your blood descendants) each would begin to get $37,500 per year, which will only grow over time. Given the low 3% withdrawal rate, I suspect the corpus would only grow over time providing your descendants with some money on a regular basis. Is that not generational wealth?

[Anonymous]

Anonymous wrote:Well the thing about generations is you end up with more people over time. So it depends on what you want for what generation.

This, the math of reproduction will always work against you with trying to preserve familial wealth. A wealthy family from 200 years ago will have hundreds to thousands of descendants. And the money will not be compounding without “drag”, it will be withdrawn from, there will be inflation, mismanagement, etc.

Even if you don’t touch the principal, the value of the principal will be eaten away from by inflation unless a fraction of the interest is reinvested.

[Anonymous]

My great grandfather, along with his brother, founded a business in 1917 that, according to his obituary in 1939, was making "several million dollars yearly." Then my grandmother and her sister inherited money. I remember in the late 90s I was staying at my grandparents' house helping out because my grandfather had dementia. A not-so-great boyfriend came and stayed for a bit and he snooped into my grandmother's ledger which was sitting in the den and told me all wild-eyed that there was 3 million in the one account he looked at. When she died, she ended up leaving about 1 million to each of her three children, including my mother. When my mother died, my sibling and I got under $500k -- but each of us had had college and professional school paid for. I don't have kids, but my sibling's kids have school paid for as well. But the money has gone down with each generation. Eventually it peters out.

[Anonymous]

Anonymous wrote:My great grandfather, along with his brother, founded a business in 1917 that, according to his obituary in 1939, was making "several million dollars yearly." Then my grandmother and her sister inherited money. I remember in the late 90s I was staying at my grandparents' house helping out because my grandfather had dementia. A not-so-great boyfriend came and stayed for a bit and he snooped into my grandmother's ledger which was sitting in the den and told me all wild-eyed that there was 3 million in the one account he looked at. When she died, she ended up leaving about 1 million to each of her three children, including my mother. When my mother died, my sibling and I got under $500k -- but each of us had had college and professional school paid for. I don't have kids, but my sibling's kids have school paid for as well. But the money has gone down with each generation. Eventually it peters out.

That's a pretty damn good run!

[Anonymous]

Anonymous wrote:My great grandfather, along with his brother, founded a business in 1917 that, according to his obituary in 1939, was making "several million dollars yearly." Then my grandmother and her sister inherited money. I remember in the late 90s I was staying at my grandparents' house helping out because my grandfather had dementia. A not-so-great boyfriend came and stayed for a bit and he snooped into my grandmother's ledger which was sitting in the den and told me all wild-eyed that there was 3 million in the one account he looked at. When she died, she ended up leaving about 1 million to each of her three children, including my mother. When my mother died, my sibling and I got under $500k -- but each of us had had college and professional school paid for. I don't have kids, but my sibling's kids have school paid for as well. But the money has gone down with each generation. Eventually it peters out.

This is why some people set up trusts that have specifics for how it can be used, how much can be taken out as a % of total, to insure that the trust will continue to benefit generations.

[Anonymous]

Anonymous wrote:Well the thing about generations is you end up with more people over time. So it depends on what you want for what generation.

Probably this is historically true but maybe not anymore.

[Anonymous]

We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

[Anonymous]

We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

I think this sounds out of touch. We have a lot but less than that, and I think it could definitely be generational wealth for our family because we have already or intend to pay for college and grad school, help with down payments, give annual gifts and seed grandkids' college funds. This has or will not only pave the way for our kids, but for the next generation as well (both directly and indirectly). Certainly generational wealth does not require "hundreds of millions."

[Anonymous]

You all need to catch up with the times.

Generational wealth = something all white people have by virtue of being white.

Har har har. But it does seem like no one ever talked about "generational wealth" till the last few years as part of the DEI/CRT trend.

[Anonymous]

Anonymous wrote:We have 3 kids, school age and are in our mid to late 40s. We have a net worth of a bit under $40M, all self earned. I would not call that generational wealth.

I think you would need hundreds of millions to be generational.

Seriously? We are much older than you with a much higher net worth and I consider it generational given how we have set up generation skipping trusts. You should too at your age and wealth. Project out 30-40 years.