Should every generation have to "start over"?

[Tamas]

I intend to carry on increasing the value of my estate until the day I die.

I've found that having money makes it so much easier to make more; and it seems to scale, the more money you have the easier it gets to make even more. This is no doubt pretty bad for society, but I'm not going to put my family at a disadvantage in futile opposition to a long term economic change.

That will be pretty much my sentiment once I have a) a family, and b) an estate of my own

[MadImmortalMan]

I get the feeling Mimsy is talking about a family patrimony that grows (or at least maintains) with each generation, rather than a pot of money you can put up your nose at age 18.

Yes. I'm talking about a family legacy that keeps on being there and many generations can count on it. Not necessarily something grandiose, but maybe a nest egg of some kind that the various people who need to can fall back on it and not starve or be homeless. It could be a bank account I guess, but I was really thinking more like an old farm or maybe a business in the family or something. Some kind of thing that people can build over time.

That's why I'm not, grumbler, in favor of inheritance tax on any property worth less than (insert a pretty high value here and index to inflation) and never on any farmland not under ownership or control of a publicly-traded entity.

That stuff may sound like a nice way to redistribute, but what actually happens is the little guy gets his land redistributed to who can pay when the taxes are due, and that's Monsanto, Blackstone Capital or Goldman Sachs.

[frunk]

Over the long term the "little guy" is likely to hit a patch where the nest egg gets zeroed out or lost.  The "little guy" doesn't have the deep pockets to last through the vicissitudes of multiple generations and the potential difficulties/bad management.  Unless that nest egg grows and the "little guy" becomes not little I don't think it's likely to be very enduring.

I agree with Philip V that education, support and passing on familial/cultural ideas are the best inheritance.

[Tamas]

Over the long term the "little guy" is likely to hit a patch where the nest egg gets zeroed out or lost.  The "little guy" doesn't have the deep pockets to last through the vicissitudes of multiple generations and the potential difficulties/bad management.  Unless that nest egg grows and the "little guy" becomes not little I don't think it's likely to be very enduring.

I agree with Philip V that education, support and passing on familial/cultural ideas are the best inheritance.

So since there is no 100% chance of eternal success, the concept fails?

[MadImmortalMan]

Maybe we should just nationalize all property owned by anyone with a low net worth and give it over to Goldman now in exchange for a nice tax percentage. 

[Valmy]

I agree with Philip V that education, support and passing on familial/cultural ideas are the best inheritance.

So basically give everything to your kids while you are still alive.  Probably for the best, I can better use it to guilt them with then.

[frunk]

So since there is no 100% chance of eternal success, the concept fails?

No, but I don't think a family business or farm is the most important part of what a family provides to its children.  If a family has the resources to set up such things there's nothing wrong with it.  However those things can more easily be taken away than culture/education/upbringing.  If you don't have those then the family nest egg isn't going to survive the mismanagement of succeeding generations anyway.  For the family as a whole I think it makes sense to diversify their occupations rather than potentially have everyone tied up in and involved in one business/farm/other financial interest.  If that tanks then the whole family is in big trouble.

[Valmy]

However those things can more easily be taken away than culture/education/upbringing.  If you don't have those then the family nest egg isn't going to survive the mismanagement of succeeding generations anyway.

Well clearly the family nest egg is not worth much without the culture/education/upbringing part.   I don't understand why one must be the only inheritance.

For the family as a whole I think it makes sense to diversify their occupations rather than potentially have everyone tied up in and involved in one business/farm/other financial interest.  If that tanks then the whole family is in big trouble.

Well, as I said, since one is unlikely to get your inheritance until you are late middle aged, you would already have diverse occupations.

[frunk]

Well, as I said, since one is unlikely to get your inheritance until you are late middle aged, you would already have diverse occupations.

If we are assuming a family business/farm is set up as MiM proposed then presumably members of the family would be working for/on it from a young age.

[Valmy]

If we are assuming a family business/farm is set up as MiM proposed then presumably members of the family would be working for/on it from a young age.

If it is a family farm most of the members of the family will flee in terror at the thought of working for it or on it

Our family farm looks like it will be saved by my cousin's son, we finally found a member of the younger generation who wants to toil in rural Oklahoma.

[Iormlund]

Yes. I'm talking about a family legacy that keeps on being there and many generations can count on it. Not necessarily something grandiose, but maybe a nest egg of some kind that the various people who need to can fall back on it and not starve or be homeless. It could be a bank account I guess, but I was really thinking more like an old farm or maybe a business in the family or something. Some kind of thing that people can build over time.

That sounds like a pretty bad idea to me. For one, it'll be diluted each generation unless you only have one kid. Secondly, what makes you think your descendants will be interested in your business or farm? Perhaps your child wants to live in another city or be a doctor instead (or, Hod forbid, a lawyer).

[Jacob]

I agree with Philip V that education, support and passing on familial/cultural ideas are the best inheritance.

So basically give everything to your kids while you are still alive.  Probably for the best, I can better use it to guilt them with then.

I certainly think it's worthwhile helping your kids out while they are young, if you can swing it.

[Barrister]

I think that the estate tax should take everything but, say, $500,000 per kid.  I've seen enough kids growing up knowing that they will inherit enough to live well so there is no need to try very hard, and it isn't pretty.  Which isn't to say that there are not lots of children of wealthy parents that get taught the same mindset that made their parents rich, but I think that, generally, people should succeed or fail based on the effort undertaken and choices made in life, not based on which parents they chose.

The estate tax is the most logical and least-distorting tax that exists.  Dead people don't resent paying it.  It only makes sense to maximize it (within reason).  Luckily, maximizing it serves a social as well as a revenue-generation purpose.

Trouble with estate taxes are they are almost trivial to avoid with a modicum of planning.  As such they only really affect those whose parents die young and unexpectedly, or whom are ignorant enough not to do proper estate planning.

And even $500,000, which sounds like a lot, might not be.  Lets say someone owns a nice little family business selling widgets.  They employ 15 people, and is worth $5 million dollars.  The owner dies and unless the heir can come up with $4.5mil to cover the estate fees, the business will either be crippled with debt or have to be sold.  Neither seems optimal for the overall economy.

[garbon]

Every parent leaves a rich legacy

[Tamas]

I think that the estate tax should take everything but, say, $500,000 per kid.  I've seen enough kids growing up knowing that they will inherit enough to live well so there is no need to try very hard, and it isn't pretty.  Which isn't to say that there are not lots of children of wealthy parents that get taught the same mindset that made their parents rich, but I think that, generally, people should succeed or fail based on the effort undertaken and choices made in life, not based on which parents they chose.

The estate tax is the most logical and least-distorting tax that exists.  Dead people don't resent paying it.  It only makes sense to maximize it (within reason).  Luckily, maximizing it serves a social as well as a revenue-generation purpose.

Trouble with estate taxes are they are almost trivial to avoid with a modicum of planning.  As such they only really affect those whose parents die young and unexpectedly, or whom are ignorant enough not to do proper estate planning.

And even $500,000, which sounds like a lot, might not be.  Lets say someone owns a nice little family business selling widgets.  They employ 15 people, and is worth $5 million dollars.  The owner dies and unless the heir can come up with $4.5mil to cover the estate fees, the business will either be crippled with debt or have to be sold.  Neither seems optimal for the overall economy.

Heck, $500k is not even enough for a 3 bedroom house in rural Surrey, UK. OMG TEH RICH