Dynasty Money

[WDELTA]

Has anyone here ever thought of investing $100-$200 every month for the future? And by future I mean loooooooooong term future. I mean as far as leaving it in the will saying only a % of the dividends could be spent for a few generations. If so what would you invest in? Or why would you not do this? I've mentioned this idea to a few people and like the title says I like to call it dynasty money, they seem to like it so far, but I know you all will have some advice too.

[Nika]

My dynasty investment will probably be my son's college education. It is tough enough to save for that. Between retirement, college education and paying off massive NYC mortgage that comes with massive NYC maintenance, I think there is no point in designating something separate.

We just save what we can, and hopefully, there will be something left over for future generation (for example paid off NYC apartment). But since we cannot predict our retirement expenses (read -- medical expenses 50 years in the future) it is best to just save in general, and re-designate money for different use later.

[feh]

Has anyone here ever thought of investing $100-$200 every month for the future? And by future I mean loooooooooong term future. I mean as far as leaving it in the will saying only a % of the dividends could be spent for a few generations. If so what would you invest in? Or why would you not do this? I've mentioned this idea to a few people and like the title says I like to call it dynasty money, they seem to like it so far, but I know you all will have some advice too.

I think about this often. There is a pretty good chance that my wife and I will not spend all of our savings before our deaths. The concept of leaving behind a fund that continues to grow and could be used by multiple generations of heirs and/or for charity is very appealing.

[EEinNJ]

Our government & tax policy takes an increasingly dim view of this. That is, when you die, THEY want the money.

Besides the obvious revenue need, it's social engineering to keep wealth from being concentrated in families.

There are many high-end firms that specialize in preserving family wealth and inter-generational transfers to get around this. It's very common, though, for the third generation to squander Grandpa's money, since they grew up with it and didn't have to work for it.

My point is, you can try to create a "dynasty", but the government and your decendents have other plans!

[Nika]

Besides the obvious revenue need, it's social engineering to keep wealth from being concentrated in families.

When you forget the ideology, and look at the reality, this is what the government is actually doing -- lowering taxes and increasing the estate tax exemption like crazy. It has never been so good to be rich:

Year Estate Tax Exemption Top Estate Tax Rate
1997 $600,000 55%
1998 $625,000 55%
1999 $650,000 55%
2000 $675,000 55%
2001 $675,000 55%
2002 $1,000,000 50%
2003 $1,000,000 49%
2004 $1,500,000 48%
2005 $1,500,000 47%
2006 $2,000,000 46%
2007 $2,000,000 45%
2008 $2,000,000 45%
2009 $3,500,000 45%
2010 $5,000,000 35%
2011 $5,000,000 35%
2012 $5,120,000 35%
2013 $5,250,000 40%

There are many high-end firms that specialize in preserving family wealth and inter-generational transfers to get around this. It's very common, though, for the third generation to squander Grandpa's money, since they grew up with it and didn't have to work for it.

In spite taxes being much lower than in previous decades, the rich are not paying them anyway. Joe Schmoe who gets up at 6 am and commutes to his office for a average job will pay far more as a percentage of his earnings than those who will never have to work and have a tonn of wiggle room and good tax and estate planners.

My point is, you can try to create a "dynasty", but the government and your decendents have other plans!

that 5.25 million is per person. 10.5 million per couple!

So you are so right, no point for OP to save, with 100-200, they will run into the 10 million+ estate tax problem in no time!

P.S. The bankrate savings calculator only goes up to 100 years, so I could not tell you how long it would take OP to run into this problem assuming $100 a month saving at 6% gain every year. But you can bet that at that time estate taxes will be different, that money will be worth many times less, and if current trend is any indication, there is no way we will ever catch up to the point of having this problem.
It irritates me when people just go and plug in what they are being fed on Fox news into a post that has absolutely nothing to do with it.

[EEinNJ]

@Nika, I get your sarcasm, but I can assure you I'm the opposite of a Faux news listener.

I agree that estate & other tax rates have been cut in recent years, this is why they're known as the "Bush-era" tax cuts. But as we've seen lately, the pendulum is swinging back as the government grapples with the tax revenue vs. budget problem, and our society realizes that more & more of the pie is going to the <1%. But the IRS won't get enough by soaking the rich, so they'll do what they always do- come after the middle class, and they won't wait until you die to get their piece.

I think saving money for the long term is a great idea (and $1-200 is peanuts), whether you plan to give it away before you die, or leave it as an inheritance- and I never suggested otherwise.