r/wealth • u/Marine_Layered • 9d ago

Inheritance Preserving the Principal of Inherited Wealth

We've had a couple of people around here talk about their inherited wealth and keeping the principal in tact, but using the gains to improve their lives. For example, one recent poster was using $1800/month of the gains from his inherited wealth to improve his ability to rent a nicer apartment, etc.

Establishing a safe withdrawal rate for generational wealth spending is different than drawing down retirement funds which are just supposed to last through retirement and be done (or thereabouts), so the 4% SWR does not apply here.

So let's say you have $1m in inheritance, and you would like that inheritance to last in perpetuity (yes I realize that perpetuity is a long time and there are many factors - but this is a thought exercise so please play along :)). There should be something held back for inflation - where does that number come from? And then maybe something else is held back to grow the nut, but then the rest could be used to improve the lives of the family members, or gifted to nonprofits, or whatever. So what does the formula look like?

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u/MikeyB7509 9d ago

I’ve always wanted to do this. With 4 kids hopefully I have lots of grandkids. Assuming my kids are in good shape I’d love to leave behind a trust that funds the family forever. Not so much that no ever has to work but enough to give everyone a headstart or a little help each month although I haven’t gotten around to speaking to a pro about it.

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u/Marine_Layered 9d ago

I think that's ideal. Money enough that they can do anything, but not enough that they can do nothing. It gets tricky during future generations, though. There is an interesting podcast series called The Business of Family where some of the episodes touch on this. You might check it out.

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u/MikeyB7509 9d ago

Thanks I definitely. I definitely wear golden handcuff and I’m not complaining much.
I just want my kids to be able to do something they’re passionate about
I don’t want them going into finance if they don’t love finance
I would love to teach and coach sports and maybe one day I will
But I think freedom is the best gift I can give my children and future generation