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#1 2013-12-11 07:26:43

AngloSaxon
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Re: Intergenerational wealth, how is it done?

Do you follow Nonrecourse's posts in the RE threads? He's probably the expert here.


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Now reading: Coming Apart - The State of America by Charles Murray.

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#2 2013-12-11 07:27:13

goldpelican
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Re: Intergenerational wealth, how is it done?

Education probably plays a bloody big part.


My posts on Silver Stackers are either personal opinion or acting in the capacity of site administrator. Opinions offered do not constitute professional or financial advice.

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#3 2013-12-11 10:26:32

DanielM
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Re: Intergenerational wealth, how is it done?

Education probably helps a lot as gp said, also abit of grooming from the inheriter to the inheritee because let's face it, someone who has no concept of work/$$$  is going to think they hit the jackpot and blow every last $


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#4 2013-12-11 11:50:15

Argentum
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Re: Intergenerational wealth, how is it done?

DanielM wrote:

Education probably helps a lot as gp said, also abit of grooming from the inheriter to the inheritee because let's face it, someone who has no concept of work/$$$  is going to think they hit the jackpot and blow every last $

you allow members of the trust to take money out for education, the money is controlled always by the ablest in the family to invest. The family probably grows over the years and so does the trust's wealth. There can be a council that allows for special cases to take some money out such as large medical expenses/litigation etc.. Family meeting elects the ablest based on merit, there wont be much infighting in the family if that person does not get special priviliges(like taking out extra money for himself). The rest of the family or part takes on the part to be council or a watchdog to make sure the leader is investing $ appropriately for the whole family.  I guess it would work something like this; maybe i'm wrong

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#5 2013-12-11 16:50:00

Clawhammer
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Re: Intergenerational wealth, how is it done?

Ask Gina Rhineheart smile

But seriously, many of the very rich I've met have inherited their wealth and are in the process of flittering it away. They're neuveaux-rich... and won't last for very long.

I suspect the truely long-term rich families have covenants on their assests that restrict them from being sold except by a banker or by a concensus of all of the trust members.  As the latter is nearly never achievable, these assets can never be sold, however, they can be borrowed against as collatoral (hence the bankers inclusion).

As such, there's pretty much no other option but to make sound investments and continue to grow the wealth basket based on the existing assets. Further, this growth is diversified into PM's and jewelry, high end, FINE ART and property.  The first 2 are relativly portable during a time of crisis (i.e. War) and land title/deeds remain enforceable across generations and political upheaval.

We are still seeing the decendants of the owners of property resumed by the Soviet State after WW2 having their ancestors property returned to them in the former soviet satellite states (including the former east- Germany).

I'm pretty sure there are title deeds in the hands of Palestinian families forced off out of their family homes that will someday see the light of a courtroom.

Last edited by Clawhammer (2013-12-12 03:15:04)


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#6 2013-12-11 21:41:19

ShadowPeo
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Re: Intergenerational wealth, how is it done?

I have not done to much of mine, however in a couple of cases of asset groups, I have left them to people or organisations outside the family, as no-one in the family would appreciate them, and they are not small asset amounts either, given I expect this will cause a shitfight to put it nicely I to would like some ideas on locking this up


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Collect Numismatics and Stack Bullion
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#7 2013-12-12 01:07:43

Ouch
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Re: Intergenerational wealth, how is it done?

How long before intergenerational wealth like intergenerational power becomes a thing of the past?

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#8 2013-12-12 02:09:17

Dynoman
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Re: Intergenerational wealth, how is it done?

I've knew an old money family from England. Due to their land holdings and tenancy arrangements they never actually worked in the true sense of the word. Just hung around with middle class allowance incomes in lovely suburbs with little to do except socialising, sport and adventure. They've been going the same way for many generations now. Same accounting firm has managed the families interests now for over 150 years.


"Paper money eventually returns to its intrinsic value --- zero." Voltaire (1694-1778)

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#9 2013-12-12 02:54:36

goanna
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Re: Intergenerational wealth, how is it done?

Dynoman wrote:

I've knew an old money family from England. Due to their land holdings and tenancy arrangements they never actually worked in the true sense of the word. Just hung around with middle class allowance incomes in lovely suburbs with little to do except socialising, sport and adventure. They've been going the same way for many generations now. Same accounting firm has managed the families interests now for over 150 years.

Parasitical.

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#10 2013-12-12 03:11:41

mmm....shiney!
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Re: Intergenerational wealth, how is it done?

@Byron, you need to get your children involved in whatever it is you are passing down to them if you wish to create intergenerational wealth. They can't just get it when you die, they have to have inputted some blood, sweat and tears into establishing that wealth. If you do that then it stands a better chance of succeeding than just gifting them $5million of assets when you cark it.

We are talking substantial wealth here, not just inheriting the family home or the holiday home but building a family business. Real estate would play a huge part of that plan, say using your SMSF to purchase a commercial premise from which you and your wife run a business. Your children may be a part of that business, or if the property lends itself, then they may rent some office space or a shopfront from you and operate their own business from the property.

So the first thing you need to do byron (if you haven't already done so) is become self-employed. Then you employ your kids or they get jobs that teach them skills that one day can be used to be self-employed and contribute to the family firm.  smile


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#11 2013-12-12 05:57:29

mmm....shiney!
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Re: Intergenerational wealth, how is it done?

Here's nr's original thread, it covers some of what you are asking http://forums.silverstackers.com/topic- … o-101.html and his 102 thread which deals more with structures you need to set up for a property portfolio but is equally applicable to other assets http://forums.silverstackers.com/topic- … o-102.html


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#12 2014-01-17 07:58:11

mmm....shiney!
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Re: Intergenerational wealth, how is it done?

From: http://forums.silverstackers.com/messag … ml#p628368

trew wrote:

Wow thanks shiney...  saved me some legal fees lol


Obviously we agree on the importance of the "good work ethic, respect for money and proper financial skills" bit, but passing on your fortune is not always simple

What age will you be giving the kids your fortune ?
If you give them your fortune when they are 20 so they can build on it, what will you to retire on ?
If they have to wait until they are 50 or 60 to inherit it from you it's probably too late to do them much good

If you have a family business and expect them to work in it and take it over, what if they want to do something else in life ?

If there are multiple kids to pass a fortune on to, there will eventually be spouses involved and potentially arguments and splits in the family


Sorry for taking this thread off topic by the way, but it's not the first time that has happened

And i've copied this too.

Naphthalene Man wrote:
trew wrote:

Giving your kids your life savings will do nothing for them if they have little regard for money and poor financial skills - they will piss it away and still end up with nothing.


On the flip side, if you teach them a good work ethic, respect for money and proper financial skills, they can most likely make their own way in the world and their own fortune without needing your financial help.


Your assumption is that they are either one or the other. I have read 'The Millionaire Next Door' which sprouts statistics that kids that worked for things are more successful but that doesn't mean that you can't give them a hand. It is assistance with a deposit not buying a house.
On your assumption am i correct to assume that you don't believe i donating to charities either because they will just "piss it away"?

@Trew, it is impossible to answer the last 2 of your questions, suffice to say that we need to turn our investments and our business plan toward a common goal, we are already considering this. If this is not achievable then all we may leave is RE or maybe shares that pays for our retirement costs and when we die, provides a regular source of supporting income for our children. As far as family arguments go, that can be planned for to some extent with legal assistance, but can only be solved if and when it occurs. By their very nature, it is a fact of life that even the best investment plans fail or go awry, citing possible failure is not reason enough not to at least give it a go. If it was simple or easy, every loser would do it.

The first two three questions have probably been answered by what I have written, well the answers can be inferred anyway.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#13 2014-01-17 08:05:21

House
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Re: Intergenerational wealth, how is it done?

goanna wrote:
Dynoman wrote:

I've knew an old money family from England. Due to their land holdings and tenancy arrangements they never actually worked in the true sense of the word. Just hung around with middle class allowance incomes in lovely suburbs with little to do except socialising, sport and adventure. They've been going the same way for many generations now. Same accounting firm has managed the families interests now for over 150 years.

Parasitical.

How so? No harm being caused other than rearing the green eyed monster in some. Ahem.

Byron, ask your local library to get Trust Magic by Dale Gatherum-Goss for a simple but detailed guide to trusts


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
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#14 2014-01-17 08:17:29

Naphthalene Man
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Re: Intergenerational wealth, how is it done?

Ouch wrote:

How long before intergenerational wealth like intergenerational power becomes a thing of the past?

They say it takes 3 generations to blow the dough. The third generation is typically the overindulged brats that like to show their money. Don't ask me for examples, i only know second generation brats smile


''Up ahead they's a thousand' lives we might live, but when it comes, it'll only be one''
- Ma in John Steinbeck's The Grapes of Wrath.

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#15 2014-01-17 08:20:31

Naphthalene Man
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Re: Intergenerational wealth, how is it done?

House wrote:

ask your local library to get Trust Magic by Dale Gatherum-Goss for a simple but detailed guide to trusts

I bought that book but it hasn't helped me much.

Maybe i should actually read it.


''Up ahead they's a thousand' lives we might live, but when it comes, it'll only be one''
- Ma in John Steinbeck's The Grapes of Wrath.

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#16 2014-01-17 08:32:40

trew
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Re: Intergenerational wealth, how is it done?

Naphthalene Man wrote:
Ouch wrote:

How long before intergenerational wealth like intergenerational power becomes a thing of the past?

They say it takes 3 generations to blow the dough. The third generation is typically the overindulged brats that like to show their money. Don't ask me for examples, i only know second generation brats smile

Can't remember where I read it but once read that where major wealth is passed from the generation that created it to the next,
in 60% of cases it doesn't make it past the 2nd generation and in only 5% is the wealth still intact by the end of the 3rd generation.

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#17 2014-01-17 18:29:36

mmm....shiney!
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Re: Intergenerational wealth, how is it done?

trew wrote:
Naphthalene Man wrote:
Ouch wrote:

How long before intergenerational wealth like intergenerational power becomes a thing of the past?

They say it takes 3 generations to blow the dough. The third generation is typically the overindulged brats that like to show their money. Don't ask me for examples, i only know second generation brats smile

Can't remember where I read it but once read that where major wealth is passed from the generation that created it to the next,
in 60% of cases it doesn't make it past the 2nd generation and in only 5% is the wealth still intact by the end of the 3rd generation.

On average that may indeed be the case, but remember as nr always like to remind us, average is awful.

Again, these are circumstances that can only be dealt with when they arrive with properly set up family governance guidelines. It is impossible to forecast what financial decisions future generations will make with their wealth. Some will gain and some will lose - this is the reality of the world.

They are not issues that should prevent anyone from wishing to set up a process whereby wealth can be passed on to future generations. Wealth is power and this is something of great value that can be passed onto your kids. The concept of encouraging your children to build their own future and their own wealth rather than using yours is one that is based on a notion of egalitarianism - that is, every one should be given an opportunity to prove themselves and no one should have an advantage over another. We don't live in an egalitarian world - and nor should we.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#18 2014-01-17 19:55:46

trew
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Re: Intergenerational wealth, how is it done?

mmm....shiney! wrote:

The concept of encouraging your children to build their own future and their own wealth rather than using yours is one that is based on a notion of egalitarianism - that is, every one should be given an opportunity to prove themselves and no one should have an advantage over another. We don't live in an egalitarian world - and nor should we.

No the reasoning has nothing to do with egalitarianism (well at least not in my case).
It is about raising children to be self motivated and self disciplined.

If they are provided a deposit for a house and don't have to be self disciplined to save for it themselves, how will they be disciplined enough to pay the loan ?

I'd rather help kids buy a house by providing a low interest loan once they prove they are disciplined enough to save the deposit.
Also would keep money out of bankers hands - just a bonus lol

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#19 2014-01-17 20:16:20

mmm....shiney!
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Re: Intergenerational wealth, how is it done?

trew wrote:
mmm....shiney! wrote:

The concept of encouraging your children to build their own future and their own wealth rather than using yours is one that is based on a notion of egalitarianism - that is, every one should be given an opportunity to prove themselves and no one should have an advantage over another. We don't live in an egalitarian world - and nor should we.

No the reasoning has nothing to do with egalitarianism (well at least not in my case).
It is about raising children to be self motivated and self disciplined.


Yes, egalitarianism probably is not your motive, but it is with most of society. A lot of people resent others getting handouts from families, it is viewed either as a weakness or old world.

trew wrote:

If they are provided a deposit for a house and don't have to be self disciplined to save for it themselves, how will they be disciplined enough to pay the loan ?

You can't answer questions about self-discipline if it is in the future, you can only speculate. If your premise were true, then there'd be no such thing as mortgage stress.

trew wrote:

I'd rather help kids buy a house by providing a low interest loan once they prove they are disciplined enough to save the deposit.
Also would keep money out of bankers hands - just a bonus lol

A house that has no debt ensures the money is not in the hands of the banksters. Bugger the giving kids money for a deposit, it'd be my plan to leave each of them a house or some form of RE that they haven't had to drum up the deposit for and pay the repayments. Saving the deposit on a house and paying off a mortgage is not a prerequisite for living a proper life. It is the only road open to most, I'm going to skirt that road and take them down the highway.

This will help free up their capital that they earn for investing in other areas - where they will have plenty of opportunity to prove their self-discipline. wink


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#20 2014-01-17 23:09:44

JulieW
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Re: Intergenerational wealth, how is it done?

Henry Ford famously said he owed everything to some simple advice his father gave him: "Son, I'm giving you a million dollars. Don't lose it".

The only gift I know to give that makes a difference to children is love, education and self-reliance. If you give that then wealth is secondary to a fulfilled life.

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#21 2014-01-18 07:06:20

Shaddam IV
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Re: Intergenerational wealth, how is it done?

Having children would probably be a necessary start.

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#22 2014-01-18 10:20:09

jragon88
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Re: Intergenerational wealth, how is it done?

I do agree that education is an important part.. Also the exposure and explanation of why one does something helps the understanding process.. My parents brought me to every property negotiation and deals done.. I could be playing my nitendo in the back and joining in when I was older but was always around listening in the back ground.. The physical presence of being around helped me grow in my experiences rather then just being left at home and thrown into the "real" world after uni..

Cheers,
Jragon

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