I have seen $50k floated about as about the minimum value that a trust needs to have in principal in order to be professionally managed without the fees outpacing the income from the trust.
Then this lead to the next issue. More and more people today are not having kids and not getting married (whether by choice or simply lack of effort/opportunity to do so). These people are the last line of the family. That means, if the parents leave behind their inheritance to the child (who would be in theirs 50s or 60s) and that child has no dependants of their own to save up and leaving anything behind to pass down, that means in a twisted way, you get to have all the fun with all the wealth that both you yourself accumulated AND inherited from your parents. Combine them together and the fact that you don’t have to put anything aside for your kids since you don’t have any, means you could live your life away and blow all that wealth. It could be seen as sort of an exciting ending to the rest of your life AND also sad because shouldn’t you want to leave something behind and pass along to your own family? But if you don’t have any kids then you won’t have to leave anything behind and can just carelessly spend and blow everything your parents worked 50 years to accumulate and handed down to you.
Has anyone considered this? Usually in life, you are not the last generation of the family. Most of history, families always procreated and continued to do so for generations. But today, it is a common place to not have kids and we’ve never seen this happen on a worldwide scale. If 20% of the population are not going to get married and have kids, that’s a huge chunk of the world. That means the most amount of people ever in history of civilization are going to inherit wealth and not have to pass it on since they are the last of the line. Of course they could decide to still donate or put non-family into their will, but that’s for the extremely rich who have more money than they know what to do with it and can’t even spend it all even if they wanted to.
I’m talking mainly about the average person whose parents most likely have at least $1 million in value (mostly from their property and left over 401s etc) to hand over to their kid(s) when they pass. Selfishly, it seems like if you are in this situation, you’re a lucky sob. You don’t have kids of your own, so you don’t have any responsibilities to raise and care for your own children, so you can literally live selfishly by doing what you want to do like travel, buy certain things, spend your money (and your deceased parents money they handed down to you) and just enjoy life reasonably well and comfortable before you pass away yourself and try to spend the majority of it before you go).
Your definition of “average person” and mine are waaaaaaaaaaaaay different. That might be the norm in your social circle but it’s not the norm over the majority of the US population and it sure as heck isn’t a global norm.
Aside from that, though, you’re not considering that elderly singletons such as you are discussing also have additional expenses. They don’t have siblings or children or nieces/nephews to help them with things like grocery shopping, getting to doctor appointments, home repairs, etc. They may well have to pay someone unrelated to do that for them.
I think that is true. Population growth is slowing. But, in the US, population growth is still positive (0.47%). That may change in time but, for now, people are still making more babies than people die.
I don’t think parents owe their kids an inheritance. It’s an act of love. If you don’t love your kids, don’t give them a bequest. If you love them the same as your local animal shelter, then split it between them. Pretty simple.
What happens after my death is outside my knowledge or control, it seems dumb for me to try to judge or control it. So even if my kids are utter wastrels who hate me, I still give them a bequest and bid godspeed to the bloodline. It’s out of my hands.
Go back a hundred years or more and families died out due to children dying early, young adults dying before reproducing, women dying in childbirth, and diseases sweeping through town and taking out whole families. The further back you go, the less likely any particular family was to continue.
Which is why, the further you go back, the more likely it is that a novel will include a rich uncle.
Yeah, I’m afraid the average estate today is probably closer to $50k (those cited numbers are from 2016-2019, with an average $46.2k). A $1 million estate would literally be the 1%'s.
You’re already doing that, though. By leaving the money at all, you’re saying “I think it’s ok to helicopter drop a boatload of money on a person without considering if it would benefit them.” You’re running an uncontrolled social experiment on an unwitting recipient. With an additional “ha ha, if it all goes terribly, I’ll be dead and won’t have to deal with any blowback.”
We know how lottery winners turn out–usually worse off than before they came into the money. If the amounts are small, it’s probably no big deal, but less so when you’re talking hundreds of thousands on up.
I think inheritance is a good chance to continue to be a parent after death. I’m thinking of putting money in trust for my grandkids that can be used either as a down on a house or if they don’t use it it can be used for early retirement.
Presuming that death takes me by surprise, as it tends to do with people, I will not have the most current information to make a timely decision here. The real uncontrolled experiment would be to say “Bobby is a fuckup, money only harms him, I’m writing him out of my will for his own good.”
That might sense if I was watching Bobby as a ghost and could maybe reverse my decision if he turned over a new leaf. I don’t believe in life after death.
Or, phrased in a less stupid way, “I don’t have the hubris to think I should play God in a world that I no longer inhabit.”
What a strange take. People don’t normally get piles of money dumped on them. That’s a surprising thing to happen and often harmful. The default position should be to not dump a pile of money on someone. It’s the neutral action. If you deliberately choose to dump a pile of money on a person, then you have chosen to play God–and you have an obligation to act responsibly.
There are 9 billion humans on this planet. Which is roughly 6 billion too many.
The ONLY socially & ecologically responsible decision is to not reproduce. Every other beneficial decision one might make in their life is utterly overshadowed by the total screwup of contributing to the further increase of human population.
I wish I could find a reprint or online of an article once read in passing - I think it might have been the Atlantic or some major publication like that. It was a kind of Dentist’s office copy of something that I picked up in boredom. Anyway it was a great article, about inheritance law in Colonial era and later years. And Debtor’s prisons. Those are illegal now, or supposed to be.
One of the reasons lots of people wanted to emigrate to America back then was because of the practice of Primogeniture overseas. Everything in the estate is left to the eldest son. This of course means the younger males and females don’t get anything. Strike out for greener pastures, where maybe different rules can apply.
On the other hand, the heir, the eldest child also inherited the debts of the decedent. This changed the dynamic a bit. Ordinarily today, the principle (generally, with exceptions) is that the deceased’s estate will be drawn down to the limits, but subsequent or remaining debts are not inheritable. The article as I recall mentioned there were two classes of debtor’s prisons, based on whether the loan included collateral or not.
The thing is, “each according to need” is often effectively punishing the offspring that did everything right, and rewarding those who didn’t. “Each according to merit” is kind of the reverse of that- it’s piling on with the already successful. “Each evenly” is the only way to go, IMO.
For my two oldest kids, they graduate from University debt free and a safety net to find a real job without pressure of being homeless. That’s huge and something I didn’t have.
My youngest was very much on the autism spectrum and never able to live independently. How I wish I still had the need to create a trust fund, but she tragically passed away in January. But I would have worked as long as I’m able and left everything beyond the above paragraph. 
The data is clear worldwide. Fertility rates are declining even though world population continues to increase. You’ll have to know the difference between those two data. The reason why world population is still increasing is because people are living longer. But the declining fertility rates means that birth rates are in decline and by 2100 (world pop. will top off at 11-12 billion), it will plateau and begin to actually shrink. There is a long period of a lag that is misleading people into thinking population is growing when in fact the world is going to have a huge population shrinking problem the declining fertility rates is posing a huge problem to many nations that are already there. The US gets half their growth from immigration which continues to be among the world leaders in net migration increase so while you see the overall population of the US growing, the fertility rates are decreasing and people are having less babies, smaller families etc as an aggregate. Of course certain pockets and socioeconomic groups have higher fertility rates than others but don’t let that mislead you.
Also, from now until 2100, 90% of the world population growth will come from the developing world. So keep that in mind. In any case, the fact is the world is actually facing a serious decline in population problem even though the pop. is still going up (again, that’s because we just have a lot of old people piling up and not moving on so the numbers get inflated as they hang around longer), but the fact is fertility rates are dropping very fast worldwide and you might say it looks ok right now but the underlying data shows it’s going to be a serious problem.
Of course, I am not introducing into the debate the impact AI and robots/machine/automation is going to have on the planet. It will most likely alleviate the declining population problem and we simply won’t need to have as many humans on the planet due to AI pretty much being able to make everything work and efficient. The need for humans will decline sadly to say.
It’s kind of like saying, the Titanic is taking on some water, but the ship is fine right now so life is good and nothing to worry about. Of course, for the first 15 minutes, but 1 hour later half the ship will be flooded and by 2 hours will be completely submerged.
At the OP: I would generally argue that parents ought to leave most of their inheritance to kids, and that’s what I plan to do for my kids. In fact, if I’m not mistaken, many nations even have laws that require parents to do that, barring unusual circumstances.
Dropping fertility is a problem. Too many people on the planet is a problem. This looks like a situation where there may not be any good solutions. On the other hand, it’s a lot kinder for people to forgo reproduction rather than suffering mass deaths to bring overpopulation down. Not that there couldn’t be a mass death incident in our future.
Reading this thread makes me really grateful for my kids. Based on how I’ve seen them act about gifts and when their grandparents died, I’m reasonably certain they’ll handle whatever inheritance they get with aplomb and compassion for each other.
Parents don’t have a moral obligation to leave their children an inheritance, but if your kids are fairly steady and you have a loving relationship, I would think you’d want them to have whatever you can give them. If they’re too young or disabled in some other way that makes it likely a large lump sum would do more harm than good, a trust is a good solution.
Now that I think about it, a good deal of our money springs from what we inherited, and I do feel something of an obligation to pass that on to my kids. The amounts weren’t huge in themselves (no surprise bequests of millions in our families), but they were enough that we went from worrying about how we’d manage when we got old to actually having a decent amount of retirement savings.
Which raises an interesting point: much of the wealth that most people have accumulated is in retirement accounts. Those accounts are often payable on death rather than included in wills, but in the US at least, there are strict rules about how much you can (and have to) withdraw before a certain age without paying a huge chunk in penalties. That already acts as a brake on your heirs just blowing it all in the first year.
As it stands, when we die, our estate is already in a trust in order to simplify distribution of assets. We’ve written our will so that the daughter who lives with us can’t be obliged to sell the house, but her sister will get more cash to make up for it. I have faith that if there isn’t that much cash in the end, they’ll work it out amicably.
I don’t think that affects the heirs blowing the money in the first year - the original owner has to start withdrawing by a certain age, and adult heirs must empty the account within 10 years, but nothing prevents anyone from emptying the account immediately , except perhaps the income tax that will be due. ( which would have to be paid at some point but might be less in total if the money was spread out)