In American society in particular, I would assume a large reason that wealth is not passed from generation to generation currently is the enormous costs associated with end-of-life medical care. You’ve got to be in the top few percent of Americans to be able to have anything left after medical costs (or die early/unexpectedly which also tends to work against estate planning efforts.)
enormous costs associated with end-of-life medical care
This only became a thing in the last 50 years or so and would not have been a major expense a century ago. Even now the costs are about $50k to $100k per person, which is in line with what a healthy upper middle-class person spends every year. The wealthy spend a lot more than that, so the palliative care costs are unlikely to make a dent in their fortunes.
Good point about the medical costs being a relatively recent development. However, I still think they are a huge hurdle to overcome if wealth staying in a family is to become widespread. Using the number you supplied of $50k/year, the median American at retirement age could afford about 3 years of care. (Not an expert on this, just used numbers from a google search link. This only applies for the middle class though, but essentially it means that you can’t earn a little bit more than average and pass it on to your kids to build up dynastic wealth, since for the middle classes at least, at end-of-life you pretty much hit a reset button.
essentially it means that you can’t earn a little bit more than average and pass it on to your kids to build up dynastic wealth
I don’t think it ever works like this—saving a bit and accumulating it generation after generation. The variability in your income/wealth/general social conditions is just too high. “Dynastic wealth” is usually formed by one generation striking it absurdly rich and the following generations being good stewards of it.
You seem to be grasping here. The OP talked about passing down old family fortunes, not problems building new ones. Whether EOL care expenses are a significant hurdle to the new wealth accumulation is an interesting but unrelated question. My suspicion is that if it is, then there ought to be an insurance one can buy to limit exposure.
In American society in particular, I would assume a large reason that wealth is not passed from generation to generation currently is the enormous costs associated with end-of-life medical care. You’ve got to be in the top few percent of Americans to be able to have anything left after medical costs (or die early/unexpectedly which also tends to work against estate planning efforts.)
This only became a thing in the last 50 years or so and would not have been a major expense a century ago. Even now the costs are about $50k to $100k per person, which is in line with what a healthy upper middle-class person spends every year. The wealthy spend a lot more than that, so the palliative care costs are unlikely to make a dent in their fortunes.
Good point about the medical costs being a relatively recent development. However, I still think they are a huge hurdle to overcome if wealth staying in a family is to become widespread. Using the number you supplied of $50k/year, the median American at retirement age could afford about 3 years of care. (Not an expert on this, just used numbers from a google search link. This only applies for the middle class though, but essentially it means that you can’t earn a little bit more than average and pass it on to your kids to build up dynastic wealth, since for the middle classes at least, at end-of-life you pretty much hit a reset button.
I don’t think it ever works like this—saving a bit and accumulating it generation after generation. The variability in your income/wealth/general social conditions is just too high. “Dynastic wealth” is usually formed by one generation striking it absurdly rich and the following generations being good stewards of it.
You seem to be grasping here. The OP talked about passing down old family fortunes, not problems building new ones. Whether EOL care expenses are a significant hurdle to the new wealth accumulation is an interesting but unrelated question. My suspicion is that if it is, then there ought to be an insurance one can buy to limit exposure.
I don’t think those costs are relevant for families with fortunes.