7 Things You Need to Know About America’s Coming Inheritance Explosion

[xchrom]

http://www.alternet.org/economy/7-things-you-need-know-about-americas-coming-inheritance-explosion



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1. A little history.

Americans love to talk about individual opportunity, but the truth is we have always been of two minds about inherited wealth. Everybody is supposed to get a fair shot at making it with their own brains and elbow grease, but many Americans have also strongly defended the rights of individuals to do as they please with their fortunes. Inheritance and merit are competing ideas that have crossed swords many times in our history.


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2. When is the Big Boom going to happen?

In a couple of decades, most likely. Accenture, a consulting firm, looked at generational patterns and forecast that a boom in inheritance would start about 2031. Baby Boomers, the consultants reasoned, would accumulated some wealth from their parents, but Gen X and Gen Y are likely to get a bigger transfer from their Boomer parents than what passed down from their grandparents.

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3. Life becomes a lottery.

If you look back at history, you can see that inheritance has shaped society in a number of ways — for example, once upon a time only male children could inherit, or only the oldest male child. Obviously, inheritance is a basic mechanism of class stratification, with minorities and people from socially disadvantaged backgrounds getting the short end of the stick. Rich people tend to marry other rich people in part to hold onto the money, concentrating not only money, but advantages associated with it, in a small pool.

4. The parasite economy.

If wealth grows more concentrated, and the return on capital is high enough, the wealth becomes self-perpetuating. As Piketty notes, when you have a slower rate of economic growth in rich countries, more of the wealth is the result of passing on money from one generation to the next. You can end up with a society titled toward parasites rather than producers. As he describes in his new book, Capital in the Twenty-First Century:

“Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present).... Wealth originating in the past automatically grows more rapidly, even without labour, than wealth stemming from work, which can be saved.”

[Kber]

1. I obviously chose my parents poorly.

Oh well, at least I got my moms smooth skin and high cheek bones.

[JustAnotherGen]

2. Already started for me

My mom is a boomer - my dad was born in 41 . . . died in August 2011.

Vast majority of accumulated wealth went obviously to my mom.

But the money handed down to him from HIS grandfather as well as all titles to land distribution from our family's farming went to my brother and me. I have an older half sister that was never acknowledged by my grandfather or great grandfather so she wasn't able to inherit a portion of the agribusiness.

The idea was that we would always have a place to call home and all 33 grandchildren would have a financial and landed interest in being connected to each other. So I have for example - 10 acres but around me are different parcels owned by different cousins. Then another 10 over there. And another 10 over there. To sell your portion of the three farms it's pretty darn near impossible without getting at least 4 other people to agree to let someone build a road through it. Not going to happen.

I'm sharing this - because of the last statement . . . you can never make more land. When it is gone - it is gone. That increases its' value. Second - it does make the difference (inherited wealth) in how you accumulate wealth and at how rapid a pace. If you are conservative with how you invest it - it will make a tremendous difference in what your retirement years look like . . . and whether you retire or not.

[pipoman]

5. Access to a parcel is required

by most states unless there is something in the will or trust to the contrary. The surrounding property owners would not have a choice but to allow an access road. Usually, including my wife's family farm inheritance, results in one or two farming family members buying out the rest.

[JustAnotherGen]

8. Via Trust

That's how wealthy black folks in the South survived in the Jim Crow era - they protected their family and kept them together.

[pipoman]

9. Interesting

I just read "Kinship Concealed" by Sharon Cranford and Dwight Roth. During a book signing Sharon (who is black) told about this topic. Her great great grandfather received land when his owner (who also happened to be his father) freed him from slavery. The land is still in the family and in one piece because of several trusts...

[JustAnotherGen]

10. My great great grandfather

Was a run away slave. Many Americans don't realize - some ran south to Mexico. He came back and bought the land in Talladega he was born a slave on after the war. My great great grandmother was a slave on that land - although of Seminole ancestry - and that's the story of 1/4 of my family in America! We don't count the Seminole ancestry like we do the Cherokee in my father's family - as we have no connections to it and our Cherokee ancestry comes AFTER the civil war on his mother's side of the family (grandmother was 1/4 black).

[pipoman]

11. The book is a fictionalized

Story (because many details have been lost) of an Amish slave owner who had a child with a slave woman. This child was Sharon's great great grandfather.

The story of how Dwight and Sharon discovered their Kinship is as good as the story in the book. Dwight being a white Mennonite college professor and Sharon being a black Baptist college professor.

[CFLDem]

3. Huh

Than why will I be getting nothing?

I guess just like every boom, it's only the privileged that benefit...

[pipoman]

4. Boomers wealth will enrich society

Before they die they will buy retirement homes, cars, travel, health care, health care, health care. Then, when their kids do get the inheritance they will spend on vacations, homes, etc. Further the wealth held by one boomer will most often be divided among more than one person. No, I believe that the boomers retirement will lead to them having the time and inclination to spend their savings.

[SQUEE]

6. Except that once again the banksters have gamed the system..

With reverse mortgages and the like... Boomers are showing themselves to be the epitome of the ME generation, and all of it's perils, most everything you listed will help the common worker how?
Banks, health care corps, Airline and travel industry will benefit greatly, consolidating and concentrating the work of a generation in their vaults as we rejoice at the scraps they throw us?... I see a lot of Reagan trickle down in your post....

[pipoman]

7. Any time people are spending money it helps

The common worker. Buying cars, homes, health care all result in common people's employment. It takes many common people to provide the products and services associated with retirement. Further as the boomers leave the work force we will/should experience a workers job market like we haven't seen in generations. Much retirement spending also comes with tax consequences.

Reverse mortgages mean that the retiree is spending. The wealth that is a problem is the off shored wealth of corps. Even wealth like the Walton fortune is split among many heirs resulting in more spending than if it is held by one person.

Oh, and "trickle down economics" is something completely different than retirees spending their wealth. ..