Join Australia's most dynamic and respected property investment community

Holding on to Wealth

Discussion in 'Living Room' started by MTR, 13th Dec, 2015.

  1. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA
    I thought this was an interesting topic.

    Apparently most wealthy families lose their wealth by the third generation?

    If you don't get your family's relationship to money right, you risk:
    • Your hard-earned money being spent on lawyers as your kids battle over who gets what.
    • Your kids losing sight of their own goals — and their financial independence — due to thinking inherited money is a ticket to a cruisy life.
    • Sons and daughters-in-law interfering with your kids' inheritance and draining money for themselves.

    MTR:)
     
    Perthguy, BigKahuna and Adele like this.
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,954
    Location:
    Perth
    Having children naturally dilutes the money unfortunately. If each of your 2 kids have 2 kids each then those children will only have 25% of the wealth to pass on to their own kids. If you have 3 kids then it can disappear even faster

    Now if the second generation could double the money they inherit then you are onto a winner. And that, yes, takes good financial education in your parenting and their attitude.

    Trust fund bab(i)es are a dangerous mindset. I think no matter the amount of wealth you have the money should only be passed on at an age where they are mature enough to handle it. In our wills I wanted 35yo but DH wanted 28yo. I agreed on 28 as it's not a huge difference - the main idea is that they have some life experience and it necessitates that they must have been self sufficient before inheriting.
     
    MTR and WattleIdo like this.
  3. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,473
    Location:
    Sydney
    When im dead, what would I care?
     
    Bayview, tobe, RM1827 and 5 others like this.
  4. WattleIdo

    WattleIdo renovating Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,810
    Location:
    Central West NSW
    I recently had a student in my class-thirties. His Dad worked on the railways and bought lots of cheapo properties in this region - years ago. Working classs come good, I guess you'd say.
    Gave the paid off houses to his kids so that they could live there with their own children. Because he was a workaholic, he told them not to get a job. They now live in their lovely big houses and collect the dole and child endowowment. o_O
    The son now wants a job but doesn't have the attitude, stamina or skills to get one. Telling him not to get a job did not help him at all.
     
    datto, mrdobalina, hobo and 2 others like this.
  5. MarkB

    MarkB Some guy on the internet Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    180
    Location:
    The screen you are reading.
    Pretty certain that if we died tomorrow all our money would go to the dogs, literally.

    Since we don't have kids, our dogs are (indirectly) the beneficiaries of the FT.

    (FT set up to provision for their care and well-being for the term of their lives)
     
    MTR likes this.
  6. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,693
    Location:
    Brisbane..
    Talked to few people about this that are over 60,and the only person that had i think that covered in the will-legal-trust terms was one that his father set-up a bloodline three generation testamentary trust,in the mid 1930's,but i'm unsure how that even works after he explained to me several times around a campfire,bankruptcy protection.family court protection,from what he told me that may make it go beyond 3 generations,some of the Legal people within this site would have a better understanding..
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,973
    Location:
    Sydney
    Trusts generally can only last 80 years before they must vest. And about 80 years has passed!
     
    MTR likes this.
  8. Adele

    Adele Well-Known Member

    Joined:
    11th Dec, 2015
    Posts:
    189
    Location:
    Melbourne
    Lol! I would haunt them:D
    On a more serious note. Takes less than a generation to spend it all, but most times more than a generation to get it back.
     
  9. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA
    ..... But we also see some seriously rich families with a totally different mind set.

    They treat family wealth as a business and continue to work hard even after the family fortune has been made.

    MTR:)
     
    Rixter likes this.
  10. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,142
    Location:
    Perth
    Yup. You see the tran family, kids etc working in their asian grocery store despite being worth tens and tens of millions, you see their kids opening up mama trans and being owner operators etc.

    A close friend of mine's father has built up a large fortune over the last 30 odd years from nothing. No idea exactly how much but an educated guess woild be 50-150m, 50 being conservative imo. They still work, still constantly start new ventures etc but take time to stop and smell the roses too. Their daughter, my friend, only stepped into the family businesses in her mid 20s after a decade of working for others doing everything from cleaning to bar work to whatever and often just being able to pay the bills. The parents were always there to provide emotional support and love and all the kids could always come back home to live if necessary but they were expected to tough it out there on their own and that has paid dividends.

    My friend won't be the 2nd generation that blows it, that's for sure and i think she has learnt enough to pass on similar lessons to her kids in the future too.
     
    Rixter, MTR and Gockie like this.
  11. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,621
    Location:
    Sydney
    You wouldn't. But wouldn't it be nice if whilst your on the way out, you have confidence that you're children are educated enough and have learnt enough from you to be able to hold your wealth and grow it? I think that would be a nice feeling.
     
    Leo2413, MTR and sanj like this.
  12. tomlemke

    tomlemke Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    358
    Location:
    Newcastle
    Im with Biz , planning on spending every cent
     
    MTR and Terry_w like this.
  13. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,346
    Location:
    4/136 The Parade Norwood, South Australia
    Once I'm gone, I have no control of what others do - all the best to them, hopefully all those books and videos I produced will mean something. If not, then the wealth will be transferred to those who are more prepared.
     
    Jess Peletier, MTR and teg499 like this.
  14. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,346
    Location:
    4/136 The Parade Norwood, South Australia
    My dad is transferring all his portfolio to my brother and I next year. The reason is that he wants to do it while he is alive so that 1. He can watch his kids gaining some benefit and 2. It is clear about who gets what, he is still around - just ask him. Could be an idea to let them have it all once they are old enough.
     
    Rixter, MTR, Biz and 1 other person like this.
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,973
    Location:
    Sydney
    This is a good way to do it. But there are downsides:
    death
    divorce
    bankruptcy
    of the beneficiaries and that property could be lost.

    Also there is no opportunity for setting up a testamentary trust with all the extra tax benefits.
     
    MTR, BigKahuna, EN710 and 1 other person like this.
  16. BigKahuna

    BigKahuna Well-Known Member

    Joined:
    24th Nov, 2015
    Posts:
    624
    Location:
    Sydney
    I'm going to control it beyond the grave as much as possible.
     
    datto, Chilliblue, MTR and 2 others like this.
  17. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,693
    Location:
    Brisbane..
    Thanks for that,but by the motor home he was driving and the Lady half his age i think he had the basic longterm training in the consumption of luxury goods..
     
    Terry_w likes this.
  18. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,346
    Location:
    4/136 The Parade Norwood, South Australia
    Lol - I believe you would too BK
     
    BigKahuna likes this.
  19. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,954
    Location:
    Perth
    Me too - classic control freak:rolleyes:. Testamentary trust with bloodline clauses and age clauses. Gold diggers and lazy trust fund kids apply elsewhere.
     
    Last edited: 14th Dec, 2015
    Leo2413, hobo, BigKahuna and 2 others like this.
  20. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA
    what's the secret?? hehe am dying to find out, pardon the pun