How much is considered generational wealth?

[Anonymous]

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.

...or a cardboard box!

[Anonymous]

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

You aren’t willing to sacrifice your lifestyle for your kids’ education?

[Anonymous]

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

Then you don't understand the point of BUILDING generational wealth. YOU are supposed to build it too! It entirely depends which generation you are in this process, and whether you've been taught to build wealth for the next generations as well.

My immigrant in-laws were war refugees and despite being upper class in their home country, had to start from scratch. They will pass on money to their children, who have witnessed their belt-tightening and have been taught to invest carefully and think of the next generation. I think what helps is the memory of what they lost. They want to have it all again, and since that's hard to do in just one generation, they fully accept the concept of sacrifice over generations to become wealthy and influential again.

As the scion of an impoverished aristocrat, I am fully on board with all that

In that construct, any wealth can become generational wealth. It's the mindset that counts.

[Anonymous]

Anonymous wrote: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..

Good point. If, on the other hand, your grandparents had set up a perpetual trust with the stipulation that no more than 3% of the estate was to be distributed each year and it should be equally distributed between people who are direct descendants over the age of 30 and should not exceed 100K (say) a year per person (create your own rules). Index that for inflation. The 65M would have earned $3.9M (at 6%), had $1.95M available for distribution but only had to distribute $600K in the first year. Depending on when this started, it would have grown substantially over the past decade and should be able to accommodate new members being added for a very long time and for many generations, don't you think?

[Anonymous]

Depends on how those who inherit spend. My MIL inherited $3m when her father died and another $10m when her mother died. They spend….a lot. They’ve bought and torn down and rebuilt multiple houses, bought multiple very expensive new cars every other year or so, take trips that cost multiple 10s of thousands for each trip multiple times a year. My FIL immediately retired upon the second inheritance though he was well below retirement age. I suspect her parents (given they funded school for the grandchildren) who had inherited from her grandparents, expected her to pass it down to the next generation, but that’s unlikely. It does rankle when they come here and expect us to treat them the whole time and we split the bill when we go out if we are visiting them.

[Anonymous]

Anonymous wrote:

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...

LOL! We have millions and drive the Prius to our 2nd home too.

[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

Then you don't understand the point of BUILDING generational wealth. YOU are supposed to build it too! It entirely depends which generation you are in this process, and whether you've been taught to build wealth for the next generations as well.

My immigrant in-laws were war refugees and despite being upper class in their home country, had to start from scratch. They will pass on money to their children, who have witnessed their belt-tightening and have been taught to invest carefully and think of the next generation. I think what helps is the memory of what they lost. They want to have it all again, and since that's hard to do in just one generation, they fully accept the concept of sacrifice over generations to become wealthy and influential again.

As the scion of an impoverished aristocrat, I am fully on board with all that

In that construct, any wealth can become generational wealth. It's the mindset that counts.

+1 any level of wealth can be spent in a single generation. It’s the mentality and money habits that keeps on giving.

[Anonymous]

Generational wealth is a set of values handed down from one generation to another that provide the tools to enable one to live his/her best self-actualized life, with service to family and others.

To me it has nothing to do with money. Money is just a byproduct of those values. Those who make it about money are just leeches onto prior generations. They never learn to stand on their own and always expect more than they deserve as evidenced by the thought processes of many prior posters in this topic.

[Anonymous]

Anonymous wrote:Generational wealth is a set of values handed down from one generation to another that provide the tools to enable one to live his/her best self-actualized life, with service to family and others.

To me it has nothing to do with money. Money is just a byproduct of those values. Those who make it about money are just leeches onto prior generations. They never learn to stand on their own and always expect more than they deserve as evidenced by the thought processes of many prior posters in this topic.

LOL

[Anonymous]

Anonymous wrote:Generational wealth is a set of values handed down from one generation to another that provide the tools to enable one to live his/her best self-actualized life, with service to family and others.

To me it has nothing to do with money. Money is just a byproduct of those values. Those who make it about money are just leeches onto prior generations. They never learn to stand on their own and always expect more than they deserve as evidenced by the thought processes of many prior posters in this topic.

I agree with this. I think if a person can't figure out how to keep it going it's just completely wasted and I believe most people fall into this category.

[Anonymous]

Isn’t there a three generation saying? First generation earns it. Second generation spends it. Third generation blows it.

Dh and I are children of immigrants and we worked very hard for our money. We will be able to leave each child a few million.

Almost all the people we know from family money aren’t very successful themselves besides having a grandparent or parent who was wealthy.

I consider generational wealth to be at least $100m. If it is anything less, it would be split amongst children and it won’t last much further than the next generation.

[Anonymous]

These answers are ridiculous. So the cut off is $100m and if your parents leave 95million it's just a plain ole' inheritance and not generational wealth??

If you benefit from your parents being more than financially comfortable such that they can fully fund college and/or grad school, pay for whatever "launch" expenses are needed and allow you to build wealth (looking at you, posters who bought the condo in your 20s, then the townhouse, then the SFH using proceeds from previous appreciation, allowing you to own a nicer, better located home than if you started home shopping at age 35 with a normal down payment), that's benefiting from generational wealth, even if it's not generational millions.

Obviously there's generational wealth that allows for multiple generations to be well-off without any other wealth building activities (working), and generational wealth in more typical amounts that allows for smart investments, like supporting an adult child during a job change so they don't have to take the first job offer, but can take time to find one that will pay off in the long term.

What I think this board misses sometimes is that even the existence of the safety net, even if the rich parents never give you a dollar, just knowing that you will never have trouble feeding or housing your kids if it came to it, creates a level of psychological safety that many people don't have when they are in the position of having to support their parents financially or being the safety net for other family members.

[Anonymous]

Anonymous wrote:These answers are ridiculous. So the cut off is $100m and if your parents leave 95million it's just a plain ole' inheritance and not generational wealth??

If you benefit from your parents being more than financially comfortable such that they can fully fund college and/or grad school, pay for whatever "launch" expenses are needed and allow you to build wealth (looking at you, posters who bought the condo in your 20s, then the townhouse, then the SFH using proceeds from previous appreciation, allowing you to own a nicer, better located home than if you started home shopping at age 35 with a normal down payment), that's benefiting from generational wealth, even if it's not generational millions.

Obviously there's generational wealth that allows for multiple generations to be well-off without any other wealth building activities (working), and generational wealth in more typical amounts that allows for smart investments, like supporting an adult child during a job change so they don't have to take the first job offer, but can take time to find one that will pay off in the long term.

What I think this board misses sometimes is that even the existence of the safety net, even if the rich parents never give you a dollar, just knowing that you will never have trouble feeding or housing your kids if it came to it, creates a level of psychological safety that many people don't have when they are in the position of having to support their parents financially or being the safety net for other family members.

100%

And it goes deeper than that because the psychological toll of knowing you're one paycheck (or less) away from financial disaster causes health problems and even DNA changes that can lead to mental illness in future generations. (See: https://www.smithsonianmag.com/smart-news/poverty-changes-dna-linked-mental-illness-180959235/) So these "It's only generational wealth if it's from the 100M region of France, otherwise it's just sparkling Daddy Will Pay For It" posters have less than zero idea what kind of generational leg up they've actually been bequeathed by that paltry 1M per grandchild.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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..

Good point. If, on the other hand, your grandparents had set up a perpetual trust with the stipulation that no more than 3% of the estate was to be distributed each year and it should be equally distributed between people who are direct descendants over the age of 30 and should not exceed 100K (say) a year per person (create your own rules). Index that for inflation. The 65M would have earned $3.9M (at 6%), had $1.95M available for distribution but only had to distribute $600K in the first year. Depending on when this started, it would have grown substantially over the past decade and should be able to accommodate new members being added for a very long time and for many generations, don't you think?

I clearly simplified this but that was not their wish. A huge chunk went into a family charitable trust that we control in perpetuity. Each generation was given a flat amount outright, then the bulk was in trust for the beneficiary of each of the 6 adult kids.

My primary point was the size of your family clearly impacts the amount required to maintain "generational wealth." Will any of our family members go broke, obviously not. They have all been successful in their own careers so the inheritances are more for philanthropy, education and security for the next generation.

The more important thing we inherited was the idea of philanthropy. We were shocked when 15m+ went into a charitable trust instead of to the family, but we also realize this was a phenomenal lesson for all of us and will trickle down to all generations.

[Anonymous]

Anonymous wrote:These answers are ridiculous. So the cut off is $100m and if your parents leave 95million it's just a plain ole' inheritance and not generational wealth??

If you benefit from your parents being more than financially comfortable such that they can fully fund college and/or grad school, pay for whatever "launch" expenses are needed and allow you to build wealth (looking at you, posters who bought the condo in your 20s, then the townhouse, then the SFH using proceeds from previous appreciation, allowing you to own a nicer, better located home than if you started home shopping at age 35 with a normal down payment), that's benefiting from generational wealth, even if it's not generational millions.

Obviously there's generational wealth that allows for multiple generations to be well-off without any other wealth building activities (working), and generational wealth in more typical amounts that allows for smart investments, like supporting an adult child during a job change so they don't have to take the first job offer, but can take time to find one that will pay off in the long term.

What I think this board misses sometimes is that even the existence of the safety net, even if the rich parents never give you a dollar, just knowing that you will never have trouble feeding or housing your kids if it came to it, creates a level of psychological safety that many people don't have when they are in the position of having to support their parents financially or being the safety net for other family members.

This is an excellent point.