I believe we should plan not for our lives, but for generations ahead. This involves, first and foremost, establishing the set of values your family will embrace, and what will be it's ultimate goal. Leaving money to one's offspring is a good thing, but I think the best thing to pass on is a family enterprise. The less liquid the assets, the better, so they can't just go spending it recklessly. If they are properly raised and understand that the family heritage does not have the main goal of simply having money, but to use that wealth to positively influence the community around, they will keep it going for generations. If you have a family house that will be passed on, is even better because that will make then more attached to the land and the people around, and more likely to understand what is everything about. One can certainly understand why governments so desperately want to enforce heavily inheritance taxes: imagine wealthy, morally strong and highly coesive families that help communities and are almost totally independent from political influence.
Yeah that makes sense. I agree that passing along a sense of enterprise is really important. And honestly it's my dream to build a family home that has the potential of being passed down.
It seems impossible to argue that generational wealth is a positive — in the sense that wealth, fullstop, is associated with positive outcomes by nearly every metric imaginable; so I’m surprised that you’ve experienced pushback on this fact. But who gets to have it? I think this commentary seems to elide the fact that some people are much less likely to have had the opportunity to build a foundation for generational wealth, and in large part, those cards are already dealt. (E.g. https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html). Our current tax system of favoring capital gains over labor ensures that this gap will continue apace.
This type of generational wealth planning also seems to imply that our late-capitalist, post-Reagan financial system is incontrovertible and will remain in place for future generations in perpetuity. (Which, to be fair, it shows all signs of sticking for now).
I take your point very well about the responsible and community-minded stewardship of family resources — this idea resonates with me very much. HOWEVER I have to presume that my grandkids’ ability to enter adulthood debt free is MUCH more dependent on tax code reform, the ability to access free health care, and the availability of fairly priced housing, rather than my singular ability to accumulate wealth to pass on to them in my lifetime.
It’s me, I’ve been the pushback! 😅 well, kind of. I went through the elite school system up through law school. I was never close with any of the young Kennedy kids but several of my good friends were. That family has experienced horrible tragedy and addiction, and this seems to be a common story for the very rich. I do know some people who grew up with generational wealth who are happy, but I don’t think most extremely rich people lead healthy or balanced lives.
I think the key is that money has diminishing returns after a certain point. Being destitute is extremely hard, but how much marginal utility do you get out of a second vacation home? And does access to that amount of money create a chance for you or your kids to develop terrible habits? I also think it’s difficult - maybe not impossible, but very difficult - to become extremely wealthy in an ethical way. Like the Price family in Mansfield Park, this moral reality seems to leach into the people in these families.
haha, I actually love the pushback bc I love debating this stuff.
A few thoughts. First, that kind of Kennedy-esque wealth is interesting to ponder, but only an academic question for most of us. Even a high paying job (doctor, software engineer, etc) isn't going to be enough, and I suspect many readers of this blog don't even have time to steer themselves into one of those professions.
That said, I do think families like the Kennedys are an interesting case study. They, specifically, were working together generationally since the mid 1800s. Eventually they were beset by tragedies, but there were multiple generations of privilege before the Kennedy curse set in. So were they a failure because they eventually sputtered? Or a success because some members had many doors open to them? Even today, RFK Jr. was a minor national player based on his name, and other members of the family such as Katherine Schwarzenegger are Hollywood royalty. It seems to me that what the Kennedys demonstrate is some members splintering off from the family, but the tribe generally continuing to maintain their elite status and opportunities. Are they happy? I have no idea. But they seem to have many more doors open to them than the average person.
But again, I don't think most of us will ever get there. And more than wealth, what I think matters is access to opportunity. I just can't think of a way to access greater and greater opportunities — or to maintain a cohesive family identity across many generations — without there being a resource component.
Thanks so much for this thoughtful response. I agree that there's a deep policy debate to be had regarding how as a society we should distribute resources. I usually try to avoid that discussion here and rather focus on individual choice. That's obviously not the only factor in leading a productive life — the tax code etc definitely matter — but as individuals we're limited in how much control we have over these things.
I think that parenthetical — (Which, to be fair, it shows all signs of sticking for now) — is sort of a key underlying assumption. It doesn't appear that we're on the verge of major progress on any of the issues you mention. During my adult lifetime, healthcare and housing have become vastly more expensive. Taxes vary a lot by income, location etc but I wouldn't say they've overall gotten wildly more friendly for, say, middle or working class families. The same could be said for many other issues. So, I have to hope for the best but plan for the worst — or in other words assume all these trends will continue or worsen. I may vote for a better outcome, and if it happens I'll be thrilled, but I'm not holding my breath or putting my eggs in that basket.
The example that comes to mind here is childcare. You can go back and look at pictures of people protesting for affordable childcare all the way back in the mid 20th century (at least). There was a childcare bill that nearly became law in 1971. It probably seemed like the US was on the verge of solving that issue. But still, today, it's unsolved. People in 1971, and forever after, who banked on a policy solution were let down. But if in 1971 a parent thought, "I bet this is issue will never be solved so I'm going to figure out my own solution for my family" would probably have done alright. That's bascially how I think of all these issues. Hopefully we'll solve them, but since that seems unlikely what can I do in the world we have.
RE: pushback, I think it comes in two flavors. 1) inheriting money turns you into a spoiled jerk. And yeah, that's fair it does happen. And 2) This isn't how the world ~should~ work. And in an a priori sense I agree, it shouldn't. The only reason I care about this is because in practice it does and I can't change that.
"The classic example of a corporate family is one that runs a farm together"
What are modern equivalents of the family farm? Clearly, some can still pull off the family farm (Ballerina farm as case in point), but it seems increasingly irreplicable. As a fellow writer, I'm curious what types of family businesses you've considered, though I don't expect you to share.
Anyway, great thoughts. You've articulated my own desire for my kids to inherit generational wealth despite good arguments against "nepo babies."
That's the thing I wonder about, too. The only family businesses we've met people in seem to be things like plumbing, electrical, general contractor work, or restaurants, law firms. The idea of a family business seems amazing, it just seems increasingly irreplaceable as you mentioned -- or otherwise hard to start up without foresight and planning happening long before.
Those are good examples of non-farm family businesses. And you're right about the challenge of foresight and planning. Part of the problem must be that the dominant career advice today is to follow your passion, or at least do something you like to do. And while that's not terrible advice in my view, it doesn't lend itself to longer-term family business planning. Instead, it suggest your career is about you, not your family.
Those are all good examples, and I agree the follow your passion advice is all about you, not family.
Another career that comes to mind is dentists; I feel like there were a ton of family dentistry businesses in my church growing up.
One more would be real estate. About six years ago, I started thinking about this intersection of family and money. I also noticed that a lot of journalists (my profession) end up working in the fields they cover (eg an entertainment reporter will eventually work for a movie studio). So I began looking for beats that cover industries with A) many mom and pop businesses, B) low barriers to entry (no going back to school for an expensive degree), and C) high earning potential. Real estate struck me as one of the few industries that fit the bill — and that is why today I am a reporter who covers the real estate industry. I may never actually switch over and work in the industry because I like being a journalist, but if I ever want to I've now had 6 years of paid education on how the industry works.
(I don't remember the actual numbers, but a significant percentage of real estate brokerages are family businesses. In the leasing sector, about half of rentals are owned by mom and pops).
Honestly, though, I think if you're an adult who is already in a career, it's going to be hard to do this because it'll involve a career shift and possibly a dip in earnings. The closest thing to a solution I've been able to come up with is that if you're married, you can theoretically have the lower earning spouse attempt to start something why the higher earner remains a wage laborer.
I agree 100%. I am writing a piece on this issue, inspired by johann kurtz's article https://becomingnoble.substack.com/p/raising-children-worthy-of-empires
I believe we should plan not for our lives, but for generations ahead. This involves, first and foremost, establishing the set of values your family will embrace, and what will be it's ultimate goal. Leaving money to one's offspring is a good thing, but I think the best thing to pass on is a family enterprise. The less liquid the assets, the better, so they can't just go spending it recklessly. If they are properly raised and understand that the family heritage does not have the main goal of simply having money, but to use that wealth to positively influence the community around, they will keep it going for generations. If you have a family house that will be passed on, is even better because that will make then more attached to the land and the people around, and more likely to understand what is everything about. One can certainly understand why governments so desperately want to enforce heavily inheritance taxes: imagine wealthy, morally strong and highly coesive families that help communities and are almost totally independent from political influence.
Yeah that makes sense. I agree that passing along a sense of enterprise is really important. And honestly it's my dream to build a family home that has the potential of being passed down.
It seems impossible to argue that generational wealth is a positive — in the sense that wealth, fullstop, is associated with positive outcomes by nearly every metric imaginable; so I’m surprised that you’ve experienced pushback on this fact. But who gets to have it? I think this commentary seems to elide the fact that some people are much less likely to have had the opportunity to build a foundation for generational wealth, and in large part, those cards are already dealt. (E.g. https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html). Our current tax system of favoring capital gains over labor ensures that this gap will continue apace.
This type of generational wealth planning also seems to imply that our late-capitalist, post-Reagan financial system is incontrovertible and will remain in place for future generations in perpetuity. (Which, to be fair, it shows all signs of sticking for now).
I take your point very well about the responsible and community-minded stewardship of family resources — this idea resonates with me very much. HOWEVER I have to presume that my grandkids’ ability to enter adulthood debt free is MUCH more dependent on tax code reform, the ability to access free health care, and the availability of fairly priced housing, rather than my singular ability to accumulate wealth to pass on to them in my lifetime.
It’s me, I’ve been the pushback! 😅 well, kind of. I went through the elite school system up through law school. I was never close with any of the young Kennedy kids but several of my good friends were. That family has experienced horrible tragedy and addiction, and this seems to be a common story for the very rich. I do know some people who grew up with generational wealth who are happy, but I don’t think most extremely rich people lead healthy or balanced lives.
I think the key is that money has diminishing returns after a certain point. Being destitute is extremely hard, but how much marginal utility do you get out of a second vacation home? And does access to that amount of money create a chance for you or your kids to develop terrible habits? I also think it’s difficult - maybe not impossible, but very difficult - to become extremely wealthy in an ethical way. Like the Price family in Mansfield Park, this moral reality seems to leach into the people in these families.
Just my two cents.
haha, I actually love the pushback bc I love debating this stuff.
A few thoughts. First, that kind of Kennedy-esque wealth is interesting to ponder, but only an academic question for most of us. Even a high paying job (doctor, software engineer, etc) isn't going to be enough, and I suspect many readers of this blog don't even have time to steer themselves into one of those professions.
That said, I do think families like the Kennedys are an interesting case study. They, specifically, were working together generationally since the mid 1800s. Eventually they were beset by tragedies, but there were multiple generations of privilege before the Kennedy curse set in. So were they a failure because they eventually sputtered? Or a success because some members had many doors open to them? Even today, RFK Jr. was a minor national player based on his name, and other members of the family such as Katherine Schwarzenegger are Hollywood royalty. It seems to me that what the Kennedys demonstrate is some members splintering off from the family, but the tribe generally continuing to maintain their elite status and opportunities. Are they happy? I have no idea. But they seem to have many more doors open to them than the average person.
But again, I don't think most of us will ever get there. And more than wealth, what I think matters is access to opportunity. I just can't think of a way to access greater and greater opportunities — or to maintain a cohesive family identity across many generations — without there being a resource component.
First sentence I meant to say it seems impossible to argue that generational wealth ISN’T a positive! Typing too fast!
Thanks so much for this thoughtful response. I agree that there's a deep policy debate to be had regarding how as a society we should distribute resources. I usually try to avoid that discussion here and rather focus on individual choice. That's obviously not the only factor in leading a productive life — the tax code etc definitely matter — but as individuals we're limited in how much control we have over these things.
I think that parenthetical — (Which, to be fair, it shows all signs of sticking for now) — is sort of a key underlying assumption. It doesn't appear that we're on the verge of major progress on any of the issues you mention. During my adult lifetime, healthcare and housing have become vastly more expensive. Taxes vary a lot by income, location etc but I wouldn't say they've overall gotten wildly more friendly for, say, middle or working class families. The same could be said for many other issues. So, I have to hope for the best but plan for the worst — or in other words assume all these trends will continue or worsen. I may vote for a better outcome, and if it happens I'll be thrilled, but I'm not holding my breath or putting my eggs in that basket.
The example that comes to mind here is childcare. You can go back and look at pictures of people protesting for affordable childcare all the way back in the mid 20th century (at least). There was a childcare bill that nearly became law in 1971. It probably seemed like the US was on the verge of solving that issue. But still, today, it's unsolved. People in 1971, and forever after, who banked on a policy solution were let down. But if in 1971 a parent thought, "I bet this is issue will never be solved so I'm going to figure out my own solution for my family" would probably have done alright. That's bascially how I think of all these issues. Hopefully we'll solve them, but since that seems unlikely what can I do in the world we have.
RE: pushback, I think it comes in two flavors. 1) inheriting money turns you into a spoiled jerk. And yeah, that's fair it does happen. And 2) This isn't how the world ~should~ work. And in an a priori sense I agree, it shouldn't. The only reason I care about this is because in practice it does and I can't change that.
"The classic example of a corporate family is one that runs a farm together"
What are modern equivalents of the family farm? Clearly, some can still pull off the family farm (Ballerina farm as case in point), but it seems increasingly irreplicable. As a fellow writer, I'm curious what types of family businesses you've considered, though I don't expect you to share.
Anyway, great thoughts. You've articulated my own desire for my kids to inherit generational wealth despite good arguments against "nepo babies."
That's the thing I wonder about, too. The only family businesses we've met people in seem to be things like plumbing, electrical, general contractor work, or restaurants, law firms. The idea of a family business seems amazing, it just seems increasingly irreplaceable as you mentioned -- or otherwise hard to start up without foresight and planning happening long before.
Those are good examples of non-farm family businesses. And you're right about the challenge of foresight and planning. Part of the problem must be that the dominant career advice today is to follow your passion, or at least do something you like to do. And while that's not terrible advice in my view, it doesn't lend itself to longer-term family business planning. Instead, it suggest your career is about you, not your family.
Those are all good examples, and I agree the follow your passion advice is all about you, not family.
Another career that comes to mind is dentists; I feel like there were a ton of family dentistry businesses in my church growing up.
One more would be real estate. About six years ago, I started thinking about this intersection of family and money. I also noticed that a lot of journalists (my profession) end up working in the fields they cover (eg an entertainment reporter will eventually work for a movie studio). So I began looking for beats that cover industries with A) many mom and pop businesses, B) low barriers to entry (no going back to school for an expensive degree), and C) high earning potential. Real estate struck me as one of the few industries that fit the bill — and that is why today I am a reporter who covers the real estate industry. I may never actually switch over and work in the industry because I like being a journalist, but if I ever want to I've now had 6 years of paid education on how the industry works.
(I don't remember the actual numbers, but a significant percentage of real estate brokerages are family businesses. In the leasing sector, about half of rentals are owned by mom and pops).
Honestly, though, I think if you're an adult who is already in a career, it's going to be hard to do this because it'll involve a career shift and possibly a dip in earnings. The closest thing to a solution I've been able to come up with is that if you're married, you can theoretically have the lower earning spouse attempt to start something why the higher earner remains a wage laborer.