There are many individuals in societies who have grown extremely wealthy on their own merits. Through steadfast dedication, developing a novel product or idea, starting a successful company, or simply by being prolific savers, they’ve accrued enough money to live a life free from want, worry, or if they so choose, work. But once their capitalist dreams are realized, many face a conundrum: How do they instill meritocratic beliefs in their children while at the same time passing them incredible unearned wealth?
Rich world problems
Dr. Katie Higgins, a postdoctoral fellow with the Changing Elites Project at the University of Oxford, is fascinated by this apparent paradox, which, as she wrote, “promotes both the value of work among the next generation of inheritors and the preservation of dynastic wealth that will preclude their dependence on income-generating work.”
Between 2019 and 2021, Higgins interviewed 26 ultra-wealthy people living in England whose self-made fortunes ranged from £16 million to over £1 billion, asking them about their plans for their children’s inheritance and their feelings associated with it.
“By far the most intensely felt and frequently articulated concern in relation to inheritance was the spoiled child,” Higgins wrote.
“When asked about inheritance, wealthy participants’ answers tended to avoid the uncomfortable moral issue of unearned inherited wealth, and instead focused on morally acceptable themes. They emphasized that their children knew that they had to work and stressed the importance of them engaging in philanthropic activities.”
Most described laying out intricate plans, tying their offspring’s inheritance to work requirements, educational goals, marriage, housing purchases, and having kids of their own.
“Both of them are financially incentivized to make it work for their own benefit,” one multimillionaire said of his kids. “I’ve done it through hard financial means. So they’ve not just been given anything.”
Earning their inheritance?
Yet, with these restrictions in place, parents’ wealth becomes the guiding force in their kids’ lives. The inheritance regime designed to make them independent instead made them beholden to their parents, or at least to their money, well after the parents may have passed.
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In an odd twist of logic, many of the ultra-wealthy interviewees framed these inheritance arrangements as “not really giving [their kids] money.” This warped perspective was widespread. Purchasing homes, cars, and education for their kids was downplayed as not providing much financial benefit at all.
Higgins summarized the key takeaway from her interviews: The ultra-wealthy sought to do all they could to encourage their children to work, while at the same time removing any real need for them to work at all.
“Once they had amassed enough wealth to provide enduring financial security for their families independent of the labor market, the wealthy’s inheritance plans appeared to largely center on motivating their children to work, whether for themselves or others.
“However, at the same time, the family’s wealth is carefully structured to generate ongoing financial security, in an implicit acknowledgement that the labor market may not provide everything necessary for what they view as a comfortable life.”
In the U.S., just over 1% of households have over $10 million in wealth, and a mere 140,000 citizens hold over $50 million. The median family net worth is just $121,700.