How much will you inherit?

This is my point. This is not Middle Class. This is Upper Class.

Blah Blah Blah. wrote:

My parents and grandparents were a lot smarter than yours, they spent most of their money before they died.

This is the best answer.

I'll get $25k when my grandpa passes according to my grandpa's will. I've increased my mom's and 3 aunts/uncle's inheritance by about 80% over the last 2 years with sound investments with my grandpa's money. I don't expect to see any of that extra wealth to make it my way. I'd rather my mom spends the money on herself. Of course I'm 27 she's 55 and I already make a lot more money/year than she does... Who says millennials are lazy again? Tell them to come my way.

Be Real wrote:

400m wrote:

In aboslute terms, it is probably well above average for a typical American. BUT you must also remember that the "average" American is a room-temperture IQ freak with no money sense, so I'm really not focused on them.

Where I come from (nice suburb of a major city) it's not at all uncommon to have friends that common from very wealthy families, I'm talking $10-$100 million range. So my inheritance is low compared to my social circle.

It does NOT make me a deadbeat. My parents do not help me in any form whatsover in my current situation, save for a nice dinner once a month a few hundred bucks on the holidays.

This is my point. This is not Middle Class. This is Upper Class.

Well, my friends with $25 million inheritances are certainly upper class. But $2 million (my inheritance) doesn't feel that way.

Upper class = perpetuating wealth. You and your progeny don't have to work a day if you don't want to, for many generations. Most do something, however lax it may be.

agip wrote:

cant be unseen wrote:

holy i guess im pretty naive but I had no idea that 2-4 million dollar inheritances were so common. Or is this LRC being liars? I always figured a good inheritance would be like 50k or something.

look, if you live near a big coastal city and have owned a house for 20 or more years and saved money...hard to avoid having at least a million to pass on if you count the house.

of course housing elsewhere is much less valuable and some people choose not to save. Or they rely on pensions so they don't have to save.

and teachers in TIAA CREF can do astonishingly well - well over a million dollars if they save into it over 20 more more years.

it's all about forced saving...that's why a house is the largest asset for almost everyone - every mortgage payment is forced savings. Same as a 401k that you contribute to every paycheck. It just takes time.

Is it just me or is the person who started this thread a 1st class d-bag? The idea of inheriting wealth without having to work for it is what is wrong with the system. IMHO they should tax the hell out of estates, cash value life insurance and trusts and decrease income taxes. My wife and I live comfortably, but we both started with nothing. We can't stand the country club crowd, and we make more money than most of them. Whoever posited that $2-4 million is a "middle class" inheritance is an idiot, who is far out of touch with reality. According to CNN, 92% of Americans stand to inherit nothing, only 1.6% will inherit over $100,000.

http://money.cnn.com/2003/11/25/retirement/inheritance/

joedirt wrote:

Is it just me or is the person who started this thread a 1st class d-bag? The idea of inheriting wealth without having to work for it is what is wrong with the system. IMHO they should tax the hell out of estates, cash value life insurance and trusts and decrease income taxes. My wife and I live comfortably, but we both started with nothing. We can't stand the country club crowd, and we make more money than most of them. Whoever posited that $2-4 million is a "middle class" inheritance is an idiot, who is far out of touch with reality. According to CNN, 92% of Americans stand to inherit nothing, only 1.6% will inherit over $100,000.

http://money.cnn.com/2003/11/25/retirement/inheritance/

(1st class proletarian who wants to set his kids up to fail/struggle)

2-4 million dollar inheritances are not common in the US and are solidly not "middle class".

In 2013, a household net worth of ~$1.87M was at the 95th percentile in the US (presented in a table here

https://en.wikipedia.org/wiki/Wealth_in_the_United_States#Wealth_distribution

but original data here

http://www.federalreserve.gov/econresdata/scf/scfindex.htm

). Let's examine a $2-4M inheritance based on this 2013 survey data. While I would be tempted to say that it's likely for a household to have a lower net worth at the time that an inheritance is passed on than it did at its peak because presumably 1 or 2 people have been living off that net worth without working for many years, let's assume that at the levels of net worth that we're talking about the household could very well be earning more income from investments than it is spending over that "retirement" time. Of course this depends on how people choose to live, and may vary across the range of net worths we are talking about, but we need to assume some relation here to move forward. So let's just assume peak household net worth and amount of inheritance passed on are equal.

The average married household in the US has ~2 children (https://www.census.gov/hhes/families/files/graphics/FM-3.pdf). This means that for an average individual (having 1 sibling) to have a 2-4 million dollar inheritance their parents would have to be a household with a net worth of 4-8 million dollars.

Using the calculator provided at (http://www.shnugi.com/networth-percentile-calculator/), which is based on this data, or looking at estimates like the one made here (https://dqydj.com/net-worth-in-the-united-states-zooming-in-on-the-top-centiles/), also based on that 2013 data, we find that in 2013, household net worths of $4-8M correspond to the 97.7 and 99.1 percentiles of household net worth in the US.

This means that an inheritance of $2M+ probably happens for about the top 2.3% of people in the US, with about 1.4% receiving something in the range of $2-4M. This actually seems quite high to me. Still, I would not say that this is at all "middle class". Most definitions of "upper middle-class" do not extend much into even the top 5% of the population. The top 1-2% is almost universally taken to be the "upper class" or the "rich" / "super-rich".

It does seem that people have difficulty classifying the group that exists from around the 95th to 98th percentiles, which exist somewhere between upper middle-class and rich. I would say whether a household feels "upper middle-class" or "rich" with a net worth in the 95th to 98th percentile probably depends largely on how much of their net worth is tied up in their primary residence. Still, OP isn't talking about even this group of people.

If we look at an inheritance of $10M - $100M as OP mentioned, we're talking about the top 0.2% of the population.

Interestingly enough, an inheritance of ~$50k implies a household net worth of ~$100k (for an average, 2 child household), which lands right around the 50th percentile mark for 2013. So a $50k inheritance is very much "typical".

400m wrote:

It does NOT make me a deadbeat. My parents do not help me in any form whatsover in my current situation, save for a nice dinner once a month a few hundred bucks on the holidays.

Not saying you're a deadbeat, but just a quick reality check on this statement here:

Have your parents ever bought a car for you? Helped you buy a car? Let you borrow their well-maintained car?

Have your parents helped ever pay for your education? Tuition? Materials for school? Clothing, laptop, software, sporting equipment?

Have your parents ever cosigned on a loan with you for something else? Been a credit reference for an apartment you've rented? Helped you pay rent?

Have you ever been on your parents' health insurance? Have they ever paid your health insurance? Car insurance? Cell phone bill?

Did you grow up in a relatively stable home in a safe neighborhood?

Have your parents ever taken you on vacations? Paid for plane tickets?

None of this prevents you from becoming an independent, productive member of society, so I'm not trying to tear you down here. In fact all of these things contribute greatly to the likelihood that you eventually become successful for yourself. I just find it a little hard to imagine that someone who expects to receive a $2M inheritance hasn't been / isn't currently being greatly helped in life by the wealth of their parents. Have a little perspective.

Probably around 300k-400k. Though that probably won't be for another ~30 years. Ideally by then I'll be well off enough that it won't matter.

Good post, so ill respond.

Like I said, aside from a few hundred bucks during the holidays and a nice dinner here and there,,I get zero support. No help with rent, car payments, vacations, insurance, anything. It's all on me.

As far as growing up, that's a different story entirely. My parents have me a nice childhood, which I am grateful for. In many ways, adulthood has been a step down in quality of life. But I was a child, not an adult, so I can't really see the parallel reasoning here. My point is that, despite having a great childhood and decent inheritance, I'm not relying on it or using it as an excuse to coast through life like many others do.

$20

How much do you spend for it to be 2 years???

400m wrote:

hukkkkk wrote:

I'll get around exactly a million dollars.

and at that point I will no longer have to work...I plan to keep working but I'm sure perspectives change.

This is a good attitude. I will keep working but will downshift into something more enjoyable / rewarding.

Not to nitpick, but $1 million is not enough to stop working altogether. You cannot live off low-yield returns if you invest (2-3% annually) and if you just use it to live you could blow through it in 2 years

It's good that you aren't looking to coast through life off the success of your parents, but your tone on this thread whenever you talk about families that aren't in the top 2%, or even top 10% of net worth in the US is extremely entitled and shows a pretty strong lack of perspective. This is some pretty classic LR trolling but I guess I've decided to bite because I found looking up the net worth stats to be pretty interesting.

A lot of people are not conservative with money, or choose to plan their finances so that they have very little left over when they die. This does not mean that they are "a room-temperture IQ freak with no money sense" - it could just mean that given the amount of income they are able to earn in their lifetime they have decided to maximize the amount of experiences or quality of life that they get to have during their lifetime. This could also mean being generous with family and friends while they are alive.

For many, many people who don't belong to the top 10% of net worth in the US, this does not mean living indulgently and spending money frivolously. It's easy to think people must be just throwing money away like idiots if they end up broke when they die if you're earning six figures while you're still young and came from an upper-class family that supported you through childhood, setting you up to be qualified for a high-paying job like that. Many people don't have those advantages during childhood and accordingly are in a very different position throughout life. In most cases, these people will be accepting a quality of life substantially below yours, while still being unable to save any amount of money to be passed on to their children.

400m wrote:

How do you plan on "passing it down?" The IRS limits cash gift contributions to $14,000. That's nice but would cover rent for about 6 months.

You're kidding, right? The lifetime gift tax exemption is around $5.5 million. Or are you really posting 20 times in a thread about inheritance without ever having heard of that? Ah, ignorance abounds.

The major tax that the founding fathers were staunchly in favor of was the inheritance tax. The idea was to prevent the creation on dynastic families similar to the old world nobility. Obviously, we failed completely to do that and instead instituted a series of other taxes which punish the middle and lower classes disproportionately. We are now in a situation where if we were to lower the inheritance tax threshold we would be punishing a lot of very productive and well off families and their family businesses, while likely failing to extract anymore wealth from the ridiculously rich (50mil+). Perhaps we can have a inheritance tax which kicks in with a rolling percentage once you pass a certain percentage share of national GDP. Obviously, that introduces all sorts of census taking issues. Sort of hilarious that kids on college campuses all think the founding fathers were evil aristocratic slave holding oppressive white supremacists when their initial ideas on taxation and government were all about the rights, liberties, and prosperity of the little guy.

Just to clarify.... the $14k is the gift limit from person to person. $5.5 million is the inheritance limit.

Mazzei wrote:

Just to clarify.... the $14k is the gift limit from person to person. $5.5 million is the inheritance limit.

The $5.5 million can be used at any time, it's not just an inheritance exemption. The $14,000 you're thinking of is the annual exclusion you can gift in a year before eating into your lifetime limit.

Do people really not know these things?

Fascinating thread

So a parent can write a check to his child for $1 million.

Then the parent will have to file a gift tax return to declare the gift over $14,000, but not owe any taxes on this gift.

The recipient owes no tax if it is a straight cash gift.

This can happen 5 years in a row without any tax.

With the $5.5M limit, there would be tax on $500,000 in the 6th year and every dollar given after that.

The "problem" is for people with more than $5.5 million to give away.

But there are a lot of ways to work around that.