Intergenerational wealth transfers (e.g., inheriting $)

[ohgillian]

It feels like this is important context for the net worth thread, and I noticed the topic come up in some of the comments. Have you benefitted from what people call "intergenerational wealth transfers", which means either inheriting money from an older generation or getting financial help from them while they are still alive? Basically, did you get a leg up?

I threw a poll up with some options, but I'm sure there are so many things that I don't even know exist.

In looking for a few links to share in this post, I found these.

• Investopedia explainer on the topic: www.investopedia.com/generational-wealth-definition-5189580
  
  
• Federal Reserve paper saying that wealth transfers only explain a minimal part of racial wealth disparities (I am skeptical but I'm not a fed economist so ? ? ?): www.bostonfed.org/publications/current-policy-perspectives/2023/the-limited-role-of-intergenerational-transfers-for-understanding-racial-wealth-disparities.aspx

[ohgillian]

I chose several of the options. Probably the greatest benefit was that my parents fully paid for undergrad. I also inherited money and property in my 30s and it made a huge difference in our net worth, but I was already in good shape at that point because of having gone to college and having started adult life without debt.

My parents did not pay for graduate school because all of their children went on for advanced degrees, and they couldn't afford them all so my parents thought it was fairest to pay for none. That said, later in life, each parents gave me $5k to pay down my debt, which started at $40,000. 20 years ago that felt like a lot of school debt!

[scm1011]

I agree its an important factor when reading the net worth thread, and I almost included the details, including

My dad paid for my undergrad 100%.

He also lent us 6 figures for a down payment on our first house (which we paid back with 5% interest).

I expect to inherit a sizable chunk when he passes (in the not so far future, he has stage 4 cancer). I'm joint owner on all his bank accounts so I have a solid idea of how much, which is why I'm not super concerned about being behind on retirement.

[ohgillian]

Jan 27, 2024 17:45:02 GMT -5 scm1011 said:

He also lent us 6 figures for a down payment on our first house (which we paid back with 5% interest).

PDQ.

I forgot to even include this. When I wanted to buy a house in 2022 and everyone was a cash buyer, a close relative lent us $300,000 to put with our own money so we could be cash buyers. Then after closing I did post-purchase financing, took out a mortgage, and repaid him. I think we paid only like 1% interest but there was a signed contract about the loan, etc.

Did I feel like an ass being a cash buyer and probably getting an edge over other buyers? Yes. Yes I did. 

[AdaraMarie]

Lol, yeah no. My parents did not contribute to my education, home or car purchases, wedding, childcare, legal expenses for divorce...nothing. I'm sure my mom expects me to start supporting her within the next 10 years.
However, I was lucky enough to pay for college with scholarships and grants and to buy my house when the market was down in 2008. So while I am poor for the board, I am not in a ton of debt and my house is worth at least twice what I paid for it. It's falling apart on the inside and I can never move, but I am doing well.

[aprilsails]

My husband benefitted from fully paid undergrad from his parents and a contribution to the downpayment on our first house from his grandfather's estate.

I haven't received anything in terms of inheritance although my Mom offered me a loan to help with my initial share purchase. I'll have to pay her back but at much better rates than the bank.

[RockNVoll]

I paid my school loans back pretty quickly because I benefited from significant grants, work study, and financial aid (ditto someone who earlier mentioned that some expensive/big name schools also have big endowments that can offer better aid packages) and also fell into a well-paying field upon graduation. DH and his brother did inherit significant amounts from his mom; we were already well-established on our own at that point but the compound growth on the inheritance amount certainly helped us grow our NW faster.

[plutosmoon]

My parents are always there as a safety net, I lived with them rent free after college and if I ever lost my job or home, they always have a room in their home. My parents helped me as best they could, and still do, they really weren't particularly well off themselves for many years, I actually don't think their net worth was positive until their 60s. I anticipate benefiting at some point in the future, unless dad has to go into nursing care. If they are still alive when DD goes to college, they have mentioned helping pay her tuition.

They couldn't fully afford college for us. My dad has 6 kids, my 3 older half siblings went into trades, and my 2 full siblings and I all went to 4 year colleges. I worked a lot, took out loans and had some scholarships, they had a set amount they paid or borrowed on our behalf each year for the 3 of us (adjusted annually for inflation because that's how my mom is), my grandpa also would send me some pocket money each month. I had my grad degree mostly paid for by my employers (I think they paid around 80%), I took some loans and cash flowed some. I had 25k in total loans between undergrad (16k) and grad (9k). I was around 30 or 31 when I paid them off.

They gave me my dad's old car when I graduated college, so I started with no car loan, that always felt like a huge help. They also helped us all repay a part of our student loans, a check for my monthly payment always seemed to show up when I needed it most.

When my grandpa died, I was 24, he had around 15k in his accounts, my mom gave us all around $1500 each, I opened a roth ira with it. She gave us all an additional small amount later.

My exh's parents gave us money towards buying our second house (our first home was 100% financed, and we sold at a loss). Ex got that back when we sold, but it did help us have some equity, avoid pmi, allowed us to have a higher matching equity discounted mortgage from my employer, and saved me some money over the 3 years I lived there. So I did benefit significantly from someone's generational wealth.

[themoneytree]

I was the last year in the UK to receive free tuition at college and I received a grant for living expenses. My Dad did also help out with spending money and I worked so I had the same benefit of being debt free on graduating.

I clicked ‘no’ to receiving a meaningful inheritance, but that isn’t entirely true. I received £8000 from my grandfather when I was 17 and that provided the 10% deposit I needed for my first house which I bought at 18 for £42,000. So really that £8000 was meaningful because it was my first rung on the property ladder and buying a house so young meant I started gaining equity.
I sold that house 4 years later for £79,000 and used that equity as the 10% down payment on my first London flat.

Anyway over 29 years and 12 homes owned, that equity has grown to a very significant number. So in that respect a small amount really did make all the difference.

[heygrey]

My parents have given me/us little bits here and there, but it totals less than $20k in the 18 years I've been an adult. That includes our wedding. Nothing from H's parents. (eta: H's parents gave us $1,000 as a wedding gift, I forgot about that.)

I am an only child and will inherit my parents estate, but it will total less than $200k assuming they don't need to sell their house to support their end of life costs. I expect to get nothing and will be pleasantly surprised if there is anything left. We might get a few thousand from H's parents, but I expect to get nothing.

[lilypad1126]

Literally just within the last year, my mom gave my sister and me $34,000 each from money she inherited from her parents. It was “nice to have” for me, but it was life changing for my sister.

My H inherited almost $300k from his dad. That’s part of our savings/retirement money.

My parents were not in a position to help pay for my college though my mom did help pay a small part of loans (about $5k or so out of the total $150k. Not knocking this, just putting it in perspective). So building wealth has been on me/my H. So while we are on the lower end of folks here, I feel good about where we’re at.

[Pom]

I noted my family farm land lease in my net worth post. I grew up on a farm in the Midwest. My grandparents started with a smallish farm in the 1920s, they and my parents added to it. My parents were always in debt during my childhood and my dad died when I was a senior in HS, leaving my family still in debt. My mom, sister and I farmed for another couple of years without him. I missed out on scholarships to university, opting instead for a local tech school to stay and help my mom. After my sister had her second child, my mom started leasing the land to other farmers. She passed a couple of years ago and it came to my sister and I. I got hurt when I was young due to a farm accident and the revenue pays what I consider a reliable pension. We don’t have kids, so it will pass to my sister’s daughters and a granddaughter (our decision too). We are very grateful for this help and as someone stated above, we always felt secure, knowing there was a safety net.

[mrsmayhem]

In laws gave us $15K to help with our first home purchase. 
They also give have given us $2-3K every Christmas for the past 5-6 years. We always put it in 529's for our kids, so essentially, they are helping pay for our kids' future education. 

My parents don't have a lot of extra money, but they did pay for my room & board in college, which was a lot for them. (Tuition was covered by scholarships.)

Both families contributed 5-10K toward our wedding. 

[Stan]

I paid for community college and my BA with minimal student loans by going to cheap CA state schools. Paid for grad school with tuition assistance and about 3k of my own money.

@@@ ETA: at one point after my starter abusive marriage divorce I was only eating one meal a day and was late on tuition. I asked for help from the same grandmother who I inherited money from much later and she sent me an ad she had clipped about selling my eggs or being a surrogate. I truly loved her but until I inherited the money I had zero expectations from her. I borrowed the money for tuition from my other grandparents and paid back at 10% interest (my choice).

At 30 I got about $130k from my bootstraps depression era grandmother. I’ve not spent much, it’s invested, but it obviously helped significantly with my net worth, especially a decade later. Also bought a house in 2019 and sold in 2021 for 100k more with no tax implications because our move was work related (partial exclusion). Those were the two biggest contributors along with becoming way more financially literate from this board and investing early and often, and buying the dips.

ETA: my parents just inherited and gave us 10k out of nowhere for Christmas. It’s funding a huge vacation for us this year. Plus they moved to where we live while I was deployed which helped a lot with childcare. H did not need to hire out beyond what we pay for her preK and aftercare. Very privileged they were able to and chose to do this allowing my deployment to be a financial boon rather than a drain.

[wanderingback]

College used to be so much cheaper I went to an out of state school and I think my tuition was around $16,000/year. I got a soccer scholarship and then my parents paid the rest (I think my grandparents helped with a few thousand as well, maybe $5,000). I’m very thankful and lucky for that. They did not help at all for med school.

Like most Black families, we do not have significant intergenerational wealth, but am very very very thankful that my parents helped me with undergrad of what my scholarship didn’t cover.

[fortnightlily]

My parents paid for my undergrad (though I also graduated a semester early), and gave me one of their old cars when I moved out after college. So giving me a debt-free start was definitely a huge leg up. They have also given us small amounts for our wedding and home (i.e. covered the cost of the cake or dress, or a piece of furniture) but those are things we could have afforded without them. They are also contributing to a 529 for my child.

[mainelyfoolish]

My parents paid fully (tuition, room, board, books, etc.) for my undergraduate degree at an in-state school and they gave me their old car after I graduated. I lived frugally, with roommates, and worked more than one job off and on throughout my 20s, but at least I didn’t start out in debt. I did take on debt from a grad school program that I never finished, so that was a big mis-step, but the payments were manageable until I inherited $35k from a childless great uncle at age 29 which allowed me to finally pay off the student loans and set aside a good e-fund.

My DH’s parents paid for a substantial portion of his college degree and he worked part-time and had a co-op job, so he graduated with a small amount of debt that he was able to pay off not long after graduation by living frugally and working a lot of overtime hours. His parents last year gave him $25k out of his grandmother’s estate and, like a pp said, it’s a “nice to have” amount of money at this point in our lives (age 49). His inheritance is sitting in our bank account waiting for him to decide what he wants to do with it.

Starting out with low or no school debt helped both of us so much, we want to do the same for our two kids (currently 10th and 5th grade). We didn’t save a lot in their 529s when they were young, but we’ve been saving aggressively since I went back to work 2 years ago. I’m optimistic we’ll be able to cover all or most of the cost of an in-state school (either at an in-state school or the equivalent amount of money elsewhere). We’re in an income range now where my kids won’t get need-based scholarships.

[shortstax]

This is important context for everything, isn't it?

As someone who selected that first option (for both DH and I), even though we're doing well and helping out my parents financially, people's uneven starting points continue to be a thief of joy for me at times. I try not to get self conscious about it, but it's hard not to.

And then I think of people who started at harder points than my own, and I feel shitty. Is there a happy in between? I'm definitely my own worst enemy on this topic.

[midwestmama]

My parents paid for most of my undergrad. I had about $1500 in student loans when I graduated, which I was able to pay off within the 1.5 years after I graduated. They also bought me and my sister each our first cars.

My mom inherited a house from her dad and half of a farm from her mom (her brother owns the other 50% of the farm) when they passed away. My sister and I will split these properties after our parents pass away. (Or, my mom might sell her half of the farm to her brother and then give me and DH that money. My sister would like the house (I know she wants to retire there, without her actually admitting it), and we aren't good at sharing things, and I don't really want to fight over it. However, there are a few things in the house that I would like.) My mom inherited all the jewelry from her grandmas and an aunt, so my sister and I will divide that after our mom passes away.

DH's parents are divorced and neither has much, so we aren't planning on/expecting inheriting anything from them. (Frankly, they are the reason that I'm glad that debt can't be inherited.)  ETA:  DH's needs were met growing up, but he really didn't have much in terms of "extras."  He had to pay for his Bachelor's and MBA, and worked full-time his last year of his Bachelor's degree.  He is still generally a frugal person, though will be less frugal on some bigger ticket items (e.g., his truck, Detroit Lions playoff game tickets, special trips/vacations).

[chpmnk1015]

Dhs dad paid for his undergrad so that was great.

i chose benefitted in some other way.. we have had generous gifts given to us.. someone paid for a dining room set, gave me a few K towards a car, or stuff like that.. so. amazing, and it has helped for sure.. but we did not inherit some crazy amount at all..

[ssmjlm]

Yes we’ve benefitted greatly. But I’m the only living child now with their only grandchild. They figure that it’s better to get benefits now than later.

DH’s parents paid for part of undergrad and then ran out of money, forcing him to pause and get in state status so it would be cheaper. So he didn’t have loans, but it also delayed entering the workforce for him.

[janegold]

I haven't responded in the net worth thread but H received a $20k inheritance from his grandfather (all 4 of our parents are still alive). That may not seem like much compared to some, but it allowed us to put a downpayment down on our first condo in the city; which in turn allowed us to generate enough equity to purchase an expensive home in the suburbs; which we partially leveraged to buy a vacation/investment property. That $20k has allowed us to generate 7 figures of net worth over the past decade.

We both also had undergrad paid for by our parents (grandparents, in H's case).  I still had significant grad school debt ($275k), however.  Thankfully, I was able to pay that off within about 10 years.

[brooklyn]

Yes, I’ve hugely benefited from my parents help. They paid for undergrad and our wedding, provided us with a down payment on our house, pay our kids private school tuitions, and gift us enough money each year that I’ve been able to remain a stay at home mom. They’d rather see their kids/grandkids taken care of now while they can enjoy it with us.

[tcu2003]

I picked benefited income other way. My dad and uncle were each lucky to each inherit a very small, paid for house when their parents passed away. In my dad’s case, it was right before he and my mom married, and it was the home I grew up in up in. The house wasn’t worth much, but was paid for, and allowed my parents to provide stable housing for my sister and I. They didn’t have enough money to pay for college, but due to their low HHI (my dad went on SSDI when I was in 6th or 7th grade), I qualified for a ton of grants, in addition to academic scholarships, so I graduated from private school and then grad school with what I would consider a small amount of student loan debt (under $30k). My parents were also able to pay for my
gas the entire time I was in college, as well as my cell phone and health insurance. They did something similar for my sister. I expect to get nothing when my mom passes, especially if she needs any long term care. My dad passed relatively quickly after a cancer diagnosis about 12 years ago, so it's just my mom now.

DH's parents don't talk much about finances, but I don't expect an inheritance there either. He lived with grandparents and worked a ton and paid his way through college without loans. I know his dad has a USPS pension, and his mom just retired last year, though I don't think she has a pension. They own their house, so depending on long term care needs later in life, maybe that will be sold. DH has 2 brothers who could use any inheritance money more than us, so if his parents choose to split it between those 2, that wouldn't bother me (though to be fair, no idea how DH would feel about that).

[bdubs419]

We have benefited a decent amount and agree this has definitely helped put us in a good position.

Parents paid for a decent portion of college. Maybe had about 30K of loans which were able to be paid off relatively easily.

Also contributed to probably 50% of wedding.

Received inheritance money of about 100K total.

A combination of this help and working really hard to save early has paid off.

[keweenawlove]

My parents gave me the equivalent of 1 year of the full budget for my local state school. The bigger benefit to me was my mom worked at the university which 1) got me half price tuition and 2) she knew all the deadlines for big scholarships and pushed me to apply to I ended up with a scholarship that paid full tuition cost. All those combined paid for a majority of my undergrad.

It doesn't feel like major money but my grandma put $25 in savings bonds for me every birthday and Christmas. It ended up being about 1/3 of my first house down-payment.

[sadlebred]

My parents paid fully for my undergrad including room+board (private room last 3 semesters--horrible roommate situations they got tired of me dealing with). They would have paid for my siblings's but they dropped out after 1 semester at the local tech school. That money went to help pay for my undergrad. Sibling later went on to earn an AA in their 20s and BA a few years ago using a combination of work paying for it, parents helping with all of the "fees" for the BA, and a relative who worked at the university where they got their BA--so free online tuition.

I got $1000 from my parents towards my first house and about $2000 to help with attorney's fees when I got divorced. They've helped my sibling in many ways over the years that have probably amounted to low $XX,XXX++.

No inheritances on either side.

Edited to add: My parents always told us they would pay for undergrad if we went to an instate school, so I went to large instate university.

[ssmjlm]

Jan 28, 2024 20:31:46 GMT -5 keweenawlove said:

It doesn't feel like major money but my grandma put $25 in savings bonds for me every birthday and Christmas. It ended up being about 1/3 of my first house down-payment.

I can remember as a kid thinking savings bonds were total crap gifts, but now I'm like "Hellooo rainy day fund!"

We've been lucky to just let them sit and mature. We've slowly cashed them in here/there, especially once they fully max. Some of the interest rates on them are like 4%!

[wildrice]

My parents paid for most of my undergrad - I left with 11k in debt after taking about 5.5 years to graduate (I changed my major my senior year). I did have scholarships but I think my parents contributed somewhere in the 30-40k range. They did not pay for anything in grad school.

They loaned us 18k when we bought our house, and ended up deciding to make 10k of that a gift so we didn't have to pay it back. They also paid for my first wedding (another 10k or so).

They were also a place for me to stay for 6 weeks after I got divorced and couldn't yet move into my new rental house. Although the logistics would be a lot harder at this point, I know if I ever needed a place to stay they would welcome me without question. That alone has provided a sense of security in adulthood that I know many people don't have.

[buckeyegirl]

Jan 29, 2024 8:46:45 GMT -5 ssmjlm said:

Jan 28, 2024 20:31:46 GMT -5 keweenawlove said:

It doesn't feel like major money but my grandma put $25 in savings bonds for me every birthday and Christmas. It ended up being about 1/3 of my first house down-payment.

I can remember as a kid thinking savings bonds were total crap gifts, but now I'm like "Hellooo rainy day fund!"

We've been lucky to just let them sit and mature. We've slowly cashed them in here/there, especially once they fully max. Some of the interest rates on them are like 4%!

I have gifted all my nieces and nephews savings bonds on their birthdays.  They were not going to notice that one family member gave them a bond and not a physical present.  I hope some day they recognize that it was helpful.