Have you noticed how we generally do not bear any responsible for the wrongs of our parents? For instance, we are not forced to pay their debts, yet, we're somehow entitled to any riches they may have left behind? Seems asymmetrical to me. I'd say, yeah, I guess if you accepted the money, you should accept at least some of the responsibility for how they were amassed.
What I mean is, that if someone creates a net negative, the descendants are not forced to pay it, yet, if they generate a net positive, they are entitled to receive it.
I think that's thinking about it backwards (at least partly).
My children are not entitled to my estate. My wealth is my private property, not theirs; I am free to direct its disposition as (my spouse and) I see fit. That's the essence of private property rights for the net-positive case.
For the net-negative case, it's a matter of practicality. Your personal debts die with you (they are settled as part of the estate settlement process and if the estate runs out of money, some creditors go without).
If you think inter-generational wealth continuity is a problem now, just imagine how much worse it would be if debt were passed along via negative inheritance.
>yet, we're somehow entitled to any riches they may have left behind
The kids of Bill Gates and Warren Buffet are getting a miniscule amount of their fathers' wealth - how is that possible if supposedly they have a right to it?
So you have it all backwards. The descendent are not entitled to the wealth of their parents or ancestors. The right to property (including disbursement through inheritance) is given to those that own it! The dollar I earn, I can do as a please with and has already been taxed.
>The dollar I earn, I can do as a please with and has already been taxed.
Just chiming in for the 'has already been taxed' thing, as it is often brought up in opposition to taxing inheritance.
No dollar is ever taxed 'finally', it's a continuous process that involves taxes in most steps.
Say you earn a dollar, it gets taxed and 70 cents remain. You go to a store and want to use those 70 cents to buy something. You don't actually get 70 cents worth of product because of sales tax. (See also VAT.)
This is very country-dependent. In a number of European countries, the children are in fact entitled to some minimal share of the wealth of their parents (in France this share is between 50 and 75%, depending on the number of children for example), and what Buffet and Gates are doing would be illegal, as I understand it.
This sounds counter-intuitive. Are children really entitled to a fraction of all the wealth generated by their parents, or are they entitled to a fraction of the estate ? These are very different things.
> German succession law orders that all lifetime gifts made by the testator within a period of ten years prior to their death is added to the value of the estate. Such gifts are thus also basis for calculation of the forced share.
and a provision like that seems like a clear necessity to prevent people from working around the compulsory-share legislation by just giving their money away before dying. And yes, my understanding (which could be totally wrong!) is that this means that there's effectively a clawback provision on gifts in Germany.
So it's neither "fraction of the estate" nor "fraction of total wealth generated" but a compromise "fraction of what the estate would have been if not for certain actions on the part of the parents".
According to https://works.bepress.com/aaron_schwabach/3/download/ there are in fact such clawback provisions in various European countries (as of 2011, but I don't think that much has changed since then) with different details: time periods, whether you can claw back non-fungible goods from someone who purchased them in good faith from the gift recipient, whether children can officially sign away their rights to gifts at the time of the gift so they later cannot invoke the clawback provisions, etc, etc.
Yes, from a US-or-UK common-law point of view this all seems fairly counter-intuitive. ;)
Both Gates and Buffett have seemed to be following a quote from Buffett in the mid-80s. Warren aims to leave "enough money so that they would feel they could do anything, but not so much that they could do nothing."
The estate can be sued for debts. There is a time limit on filing claims though and there might be some limits on what they can come after in the sense they might be considered jointly-owned like a house if you're still living there.
