My Opinion on Building Generational Wealth

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My Opinion on Building Generational Wealth

Corey ConklinPro Member
Investor · Member since 2021 · 129 posts · 209 votes

This is something I hear real estate investors talk about all the time. Their goal is to build generational wealth for their kids, grandchildren, great grandchildren, etc. They believe by building a good real estate portfolio and acquiring assets they will create generational wealth for their family. I believe I have a controversial take on this stance. I 100% disagree with this line of thinking!

There are stories of family’s that have had multiple generations build wealth through owning land, real estate, oil, etc. that have lost it all in 1 generation! Wealth is incredibly hard to obtain and 10x harder to keep. Just because you are able to hand over your children and grandchildren wealth doesn’t mean that they will know how to keep it. They have to know how to handle the wealth if they are going to keep it. My focus will be on teaching them how to create and keep wealth, not handing it over to them.

How I will focus to create generational wealth will be the complete opposite of what most people want to do. My kids will not be handed anything in life, they will EARN everything. I will not give them money, instead I will be there to teach them what they need to know to get their own money. I will teach them what I’ve learned in my life that they can use to create their own success. When they need advice, I’ll be sure to provide it. When they are struggling through the rough times, I’ll be there to support them. My goal is to create kids who are good people. If I can do that, they won’t need my wealth, they will have their own.

What are your thoughts about creating generational wealth?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y

now from reality.

I have worked in this industry for 50 years now.. and met all sorts of folks from beginners to the Very wealthy..

what I see many times is when the kids do inherit most of them have no interest in owning the rentals or whatever property they are getting as most of the time there is massive equity.  And they just want to sell and cash out.. granted some will hold on but for many second they can sell they do so. 

So if folks are wanting their kids to keep the assets then they have to be put into a trust with very clear defined rules of the road to follow.  Anything short of that and all those rentals yo toiled with will be liquidated as soon as humanly possible.

plus if there is multiple kids rare is it they all have a meeting of the minds .. so again they just sell and divvy up.  Specially with stepped up basis. 

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  • Marcus R.
    Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes
    3y

    Great thoughts.  This is a new topic I'm learning and still have much to learn.  

    A qoute I read that I really liked is "leave your kids with enough so they can do anything, but not so much they do nothing".  So far that is going to be my approach.  This could change though depending on my childen's lives (special needs, major accident/setback, etc...)

    I agree that the the knowledge is way more important that the wealth.  The data supports this as well as I think most wealth doesn't make it past one generation.  I would love to do it well enough that the students become the teacher and I'm able to invest in their endeavors!

    A good place that helped me get started was Dave Ramsey's legacy journey book.  He did help me get started on my personal finance education and I think like most on this site we've tweaked our position as our education grew but it was a great place to get started so I recommend it.  Lots of good points on why just giving your wealth to charity is a bad idea, never occurred to me before.

    11Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    3y

    Marcus already stole my quote..... provide your kids enough $$ to do something but not enough to do nothing....

    Shaq also has the right attitude with his kids.... he has multiple statements about his wealth and his kids... basically he says " WE arent rich..... I"M rich.... you aint got jack".... you will make your own way in life. I'll be there to help guide you.... you want my $$? Then come up with a business proposal and I'll review it just like any other investment I would make. 

    16Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y

    now from reality.

    I have worked in this industry for 50 years now.. and met all sorts of folks from beginners to the Very wealthy..

    what I see many times is when the kids do inherit most of them have no interest in owning the rentals or whatever property they are getting as most of the time there is massive equity.  And they just want to sell and cash out.. granted some will hold on but for many second they can sell they do so. 

    So if folks are wanting their kids to keep the assets then they have to be put into a trust with very clear defined rules of the road to follow.  Anything short of that and all those rentals yo toiled with will be liquidated as soon as humanly possible.

    plus if there is multiple kids rare is it they all have a meeting of the minds .. so again they just sell and divvy up.  Specially with stepped up basis. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
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    20Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    As for how you are going to raise your kids everyone has their own style.

    My number one goal was to pay for my kids collage education so they were not saddled with student debt .. I did that. Daughter is now an executive at Intel going on 21 years and Makes substantial income and her retirement is pretty much set  being a Dave Ramsey disciple.  My son took a different path and became a GC after collage and is also independent.. I have never had to give them funds after collage..they used their own funds to buy their own houses and the few rentals they have.. So that was my personal goal .. and of course collage is expensive so we sacrificed to save no question about it..
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  • Zach Wain
    Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
    3y

    @Corey Conklin - 100% Homerun!  This is the best post I have read on these forums in a long time.  I am with you and od my best to make my kids work for everything.  They have chores, they get paid for them, and I encourage/make them do a lot of work around the house and take responsbility.  Without that, what's the point of handing a spoiled kid that has never had to work hard in their life a ton of assets?  So they can be lazy and waste it all, and barely appreciate it?

    I would rather leave my kids nothing but raise them to be hard working then vice versa

    If we can accomplish both avenues that is the big win!  Create wealth that allows us freedom and choice, all while raising strong/hard working/independent kids that do not need us or anything handed to them.  

    3Reply
  • Denis PonderPro Member
    New to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
    3y

    It doesn't have to be either, or.  Teach your kids values while also setting them up well when you pass.  Just because they inherit something doesn't directly mean they will botch it, that's up to the parents on how the kids were raised.  Tell them no throughout their life, set expectations, hold them accountable, love and support them.  Money and wealth have nothing to do with teaching these attributes.

    11Reply
  • Corey ConklinPro Member
    OP
    Investor · Member since 2021 · 129 posts · 209 votes
    3y
    Quote from @Marcus R.:

    Great thoughts.  This is a new topic I'm learning and still have much to learn.  

    A qoute I read that I really liked is "leave your kids with enough so they can do anything, but not so much they do nothing".  So far that is going to be my approach.  This could change though depending on my childen's lives (special needs, major accident/setback, etc...)

    I agree that the the knowledge is way more important that the wealth.  The data supports this as well as I think most wealth doesn't make it past one generation.  I would love to do it well enough that the students become the teacher and I'm able to invest in their endeavors!

    A good place that helped me get started was Dave Ramsey's legacy journey book.  He did help me get started on my personal finance education and I think like most on this site we've tweaked our position as our education grew but it was a great place to get started so I recommend it.  Lots of good points on why just giving your wealth to charity is a bad idea, never occurred to me before.

     @Marcus R. I've never read that book so I'll have to put it on the list. I'm still working to come up with the best solution on what to do with assets/wealth when I pass. I'm not a huge fan of blindly giving it to charity like you mentioned.

    I've got a few plans but they are far from normal so I'm still working through all of the details. Still a lot to figure out!

    0Reply
  • Corey ConklinPro Member
    OP
    Investor · Member since 2021 · 129 posts · 209 votes
    3y
    Quote from @Ned J.:

    Marcus already stole my quote..... provide your kids enough $$ to do something but not enough to do nothing....

    Shaq also has the right attitude with his kids.... he has multiple statements about his wealth and his kids... basically he says " WE arent rich..... I"M rich.... you aint got jack".... you will make your own way in life. I'll be there to help guide you.... you want my $$? Then come up with a business proposal and I'll review it just like any other investment I would make. 

     @Ned J. That quote is very similar to one I'm familiar with "give a man a fish, you feed him for a day. teach a man to fish, he'll eat for a lifetime" 

    My job as a father is to teach my kids to fish and watch them go catch their own. Hopefully I live long enough to watch them catch bigger fish than I ever could.

    2Reply
  • Jeffrey Fung
    Member since 2019 · 29 posts · 15 votes
    3y
    Quote from @Denis Ponder:

    It doesn't have to be either, or.  Teach your kids values while also setting them up well when you pass.  Just because they inherit something doesn't directly mean they will botch it, that's up to the parents on how the kids were raised.  Tell them no throughout their life, set expectations, hold them accountable, love and support them.  Money and wealth have nothing to do with teaching these attributes.


     Totally agree with this point as it is important to separate the two. What I have noticed is there is a larger lack of knowledge and understanding when it comes to estate planning. Understanding inheritance taxes, living trusts, etc. is something a bit more qualitative that I believe this community can help with. Raising and instilling values in our children is probably better suited for a different forum. In either case, I agree with almost every post here.  

    1Reply
  • Varinder KumarPro Member
    Real Estate Broker · LA & ORANGE COUNTY CA -Multi Family · Member since 2016 · 374 posts · 132 votes
    3y

    AS A DAILY STOIC MY SELF, EPICTETUS ONCE SAID " Be careful to leave your sons well instructed rather than rich, for the hopes of the instructed are better than the wealth of the ignorant" 

    13Reply
  • Chris Watkins
    Lender · Eugene, OR · Member since 2021 · 245 posts · 154 votes
    3y
    Quote from @Jay Hinrichs:

    now from reality.

    I have worked in this industry for 50 years now.. and met all sorts of folks from beginners to the Very wealthy..

    what I see many times is when the kids do inherit most of them have no interest in owning the rentals or whatever property they are getting as most of the time there is massive equity.  And they just want to sell and cash out.. granted some will hold on but for many second they can sell they do so. 

    So if folks are wanting their kids to keep the assets then they have to be put into a trust with very clear defined rules of the road to follow.  Anything short of that and all those rentals yo toiled with will be liquidated as soon as humanly possible.

    plus if there is multiple kids rare is it they all have a meeting of the minds .. so again they just sell and divvy up.  Specially with stepped up basis. 


     I had a business partner whose father built up a manufacturing company, sold it, became wealthy and died. He set up a trust for his children that would fund only three things: college/grad school, buying real estate, starting a business. The kids knew that they would have resources if they applied themselves, but not otherwise. I thought that was a great way to pass on money in a positive way for the next generation.

    10Reply
  • Varinder KumarPro Member
    Real Estate Broker · LA & ORANGE COUNTY CA -Multi Family · Member since 2016 · 374 posts · 132 votes
    3y

    this is great how ever I do believe as a parent you also have a responsibility to have some emergency funds to use however should they need, in cases of sickness, loss of job. it is good to be entrepreneurial but as many of us know not all entrepreneurs are successful. 

    1Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    3y

    Don't wait till you are dead! That is how the gov't gets rich. Talk to your accountant about 'gifting' your limit is 11.2 million and your spouse has the same. Get rid of your wealth while you are alive and tax free.

    5Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Chris Watkins:
    Quote from @Jay Hinrichs:

    now from reality.

    I have worked in this industry for 50 years now.. and met all sorts of folks from beginners to the Very wealthy..

    what I see many times is when the kids do inherit most of them have no interest in owning the rentals or whatever property they are getting as most of the time there is massive equity.  And they just want to sell and cash out.. granted some will hold on but for many second they can sell they do so. 

    So if folks are wanting their kids to keep the assets then they have to be put into a trust with very clear defined rules of the road to follow.  Anything short of that and all those rentals yo toiled with will be liquidated as soon as humanly possible.

    plus if there is multiple kids rare is it they all have a meeting of the minds .. so again they just sell and divvy up.  Specially with stepped up basis. 


     I had a business partner whose father built up a manufacturing company, sold it, became wealthy and died. He set up a trust for his children that would fund only three things: college/grad school, buying real estate, starting a business. The kids knew that they would have resources if they applied themselves, but not otherwise. I thought that was a great way to pass on money in a positive way for the next generation.


    forethought is important in these matters.
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    1Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    3y

    Some of your assessments I’ve considered myself. With that being said.


    How long have you been investing?

    How old are your children?

    2Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    3y

    This is exactly how I'm building generational wealth. Yes, many kids have zero interest in the property in general. Yes, many kids botch it and lose it all. Several gain nothing and even go backwards. However, there are tons and tons that build empires off of it with many possessing limited intellect. The individual many of you admire is a prime example of this. In the Black Community, this is like the second generation where in general we were able to even purchase real estate or create any sense of wealth. We had so many hurdles to over come and started off way behind. In most cases nothing was passed down and just recently, the last generation is passing down homes Big Momma worked her azz off to save for her entire life. Not sure  who know the history of Prince George's County, but the wealthiest jurisdiction in the nation of Black wealth was created when racist whites abandoned the place due to integration. Hundreds of millions in wealth was dropped in our laps. I know this went off the rails a bit but I was explaining why I think its so important especially in my community. Hopefully I have equipped my kids with ability, appreciation and work ethic. Hopefully I have prepared them far beyond being incompetent. Just like the non minority community,  I want to pass the baton and place them in a position to be ahead fresh out of the gate as opposed to 35 steps behind. Even without this cultural component, many intelligent and head strong off spring do take that baton and turn it into something incredible. Think of all the high end corporate legacies that tell the story of how their great great grand dad laid the foundation a hundred years ago (Rockerfeller, Hilton, bootlegers). They could have the dumbest kids on earth but they still start off with many advantages. 

    10Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Corey Conklin:

    What are your thoughts about creating generational wealth?

    That's not creating generational wealth. Generational knowledge--sure. But let's discuss the topic--generational wealth. That's given, that's why it's called generational.

    The knowledge transfer is now how to preserve it, and if anything grow it. That's what you teach the next generation, but I will pass it forward. Have three kids now, all of them too young to decipher how they're going to fully develop. They'll assume the generational wealth I've created and I have to hope I showed them how to continue it and preserve it.
    2Reply
  • Daniel Patrick Glushko
    Member since 2022 · 13 posts · 7 votes
    3y

    My ambition is to teach my kids to work hard and strive to be the best at whatever they are doing. 

    Im also of the mindset that if I can give them an advantage or head start I will absolutely do that as well. Be that with housing as they enter the workforce, funding for a business venture, money for college. 

    Wealth is a funny thing, I would say if you ask many young people looking to buy their first home right now, wealthy would be owning a home outright. 

    1Reply
  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes
    3y

    My thoughts on generational wealth are from the Bible, 
    Proverbs 13:22: “A good man leaves an inheritance to his children's children.”

    Our kids earn their own living, their kids are learning about Grampa and Grandma’s assets and by the time they are ten they will be more educated in finance than most college graduates. 

    3Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    @Corey Conklin

    I had always thought that is what we all think?? I did not think that very many, if any, on a forum like this would think any different.

    In any case, it is a good reminder to look far beyond the material.

    Thanks for starting the discussion.

    1Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    3y

    @Corey Conklin

    I think you have the right idea in a lot of ways. But I don't think you've thought enough about what the term "generational wealth" really means. Your idea is, I think, a bit simplistic -- it means wealth that you give to the next generation. Most rich men in history have felt exactly the same way you do: Andrew Carnegie is famous for saying, "I would as soon leave my son a curse as the almighty dollar."

    What did Andrew Carnegie do with the bulk of his wealth instead? He created the Carnegie Promise. This was a scheme whereby he agreed to build a public library and fill it with books in any community that asked for one, as long as the community promised to set aside funds to staff and maintain the library, and add to its collection into perpetuity. This scheme worked very well, and 800 of the 1700 public libraries he built in the USA are still in operation as public libraries and continue to enrich their communities, more than a hundred years after his death.

    Is this an example of generational wealth? No. But it illustrates the kind of thinking that goes into creating a perpetual family fortune that is passed down from one generation to the next and does not diminish.

    "Generational wealth" is better defined as a concentration of wealth administered in such a way that it will last a family for generations. It can be used for any number of things. It is most often used, it is true, to give the immediate members of the wealth earner's family a number of economic opportunities into perpetuity. It creates a family legacy, and tips the playing field for any scions of the family who might be born with various talents that would cost money to develop. But there are very few self-made men and women who do this for their families who simply gift it all to the next generation. As a group, people who manage to put together a fortune and pass it on are almost always shrewder than that.

    But creating a perpetual family fortune with your money is not what you HAVE to do with it, as Carnegie showed us all. I have no kids. My plan is to will my money to a charity in such a way that the principal will survive and the charity will receive a large portion of the annual interest on it to use as funding.

    10Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    @Jim K.

    Brilliant! Lots to unpack and apply to each person's individual situation.

    0Reply
  • Jason C.
    Investor · Austin, TX · Member since 2014 · 217 posts · 170 votes
    3y

    Hopefully my kids will be in their 50s-60s when I die, so passing a bunch of wealth to them seems pointless. If I have guided them toward smart money moves, they should be all set long before then.

    Of course I will leave them my properties but I’m pretty sure they will take the stepped up basis and sell the whole thing right after the funeral. Which I’m ok with.

    3Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    @Jason C.

    I think that is the most important part... be OK with what ever the kids end up doing.

    You have the choice to set up intricate trusts, or not. You just need to be OK with it. Because the other side is: how far do you want to force the next generations to conform to YOUR plan? Is that even fair?

    2Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    3y

    Trying to create a structure that will last for generations is the real challenge. Siblings don’t always get along. Especially their significant others that are now part of the family can be pretty brutal, vicious, and looking for ways to fight and fuss.

    4Reply
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