Too Much Inheritance and Other Problems of the 1% Club

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How much is too much inheritance? A recent poll of the 1% club said $63 million was too much, but $26 million was just right. Is there really a difference?

You know the problem…your Bentley breaks down and you need to take it into the shop leaving you only with your Beamer to drive.

Or, when you have to decide between the $100 million dollar mansion and the $200 million dollar one.

Or, when your country club runs out of your favorite type of Beluga caviar and you have to eat the salty mainstream stuff.

Or, God forbid, your humble yacht is no longer considered a “super yacht” and you have to upgrade to avoid embarrassment and shame.

The above list is not just my attempt to imagine what annoyances plague the wealthiest 1% of world citizens, but is completely tongue-in-cheek. Though I must admit, those were the thoughts that ran through my mind as I read this study on how much inheritance is too much.

How Much Inheritance is Too Much?


This Merrill Lynch study asked those considered wealthy a very important question – “What world problem will you tackle this year?” No. Sadly, that is not what they were asked. Rather the all-important question facing this elite group of respondents was, “How much is too much inheritance?”

Most reports I’ve read list the top 1% as having somewhere around $500,000 in annual household income. The number given to indicate too much inheritance was a staggering $63 million ($26 million was considered too little, by the way).

For most, those numbers are going to be way out of reach in terms of what to pass on to their chosen heirs. In fact, CNN reported at the end of 2013 that the average inheritance left was $177,000. There could be a lot of things to be said about the difference in those numbers, but that’s not really the point of the post. Those who worked hard for their wealth shouldn’t be ridiculed for what they have or want to pass on – they did earn it after all!

What I did find interesting however, was that the number one reason given as to why not to give too much inheritance was to encourage hard work. Forty-six percent of those polled indicated that was the number one reason not to give “too much.” The disparity in the numbers – the $63 and $26 million, in my opinion, only point out that the question of just how much inheritance is too much is largely a personal situation that is reflective of a variety of factors.

The Underlying Issue


Whether you’re a part of the 1% club, or you are considered low or middle class, the underlying issue I take out of this discussion, and the study, is the importance of teaching children about money. In a nutshell, it comes down to raising financially literate children.

Say you bathe yourself in cash. Aside from being the dirtiest person alive (if you don’t know how dirty money is just try working as a bank teller for a year), you’d be able to leave your children a nice inheritance of $50 million and set them up to never want for anything in life. But, if you did nothing over the course of your children’s’ lives to instill financial literacy in them, it’s possible they’d squander all that money you so carefully set aside for them. Compare that scenario against someone who leaves the average inheritance but whose children were raised in a financially literate home.


The latter is going to do far better in nearly every instance. It’s a guarantee in my opinion. Sure, the former might enjoy life for a while. They’ll be able to live in a certain state of luxury for an unknown period of time. However, there will be a point in time where money will run out.

The latter, with their financially literate habits, will find ways to make their money work for them and put them in a better long-term situation. They’re those who’ll be investing their money and finding ways to make it grow and using it to reach the kind of life they want instead of being caught up by the glitz of having a sudden influx of cash. Basically, it goes back to the point of not mattering how much you make but how you manage it that matters.


How much do you think is too much when it comes to an inheritance? What is one thing, other than providing a disincentive that would hold you back from giving your child too much inheritance? Do you ever speak with your family about the inheritance that you or they might leave?

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • Natalie @ Financegirl says:

    I would likely condition the inheritance I’d give to my kids. They would be required to work to get it, etc. Kind of like Dave Ramsey if you think about it. There’s no denying that money is helpful, but money without purpose may end up being dangerous, especially in the wrong hands.

    • John Schmoll says:

      I don’t know that I’d give a condition, per se, though it definitely would not be given without direction. That being said, there would definitely be purpose given behind it.

      • Andrew@LivingRichCheaply says:

        I read an article about a rich man who left money to his daughters with many strings attached. I don’t think that was a good idea. It was like things about getting a certain job, degree, marriage, kids, etc. Basically, he was giving money with strings attached from his grave. If you taught your kids well then they should know how to manage the money and you should trust them. Giving too many conditions complicates things. I do see the desire to make sure that the kids aren’t entitled though.

  • Jon @ Money Smart Guides says:

    It’s the same idea with winning the lottery. You become an instant millionaire, but if you don’t know how to handle the money, you will end up broke quickly.

  • catherine says:

    I actually have a post about this soon…I don’t know if I will leave my children and inheritance honestly. Not only do I hope they will be financially stable when I go, If I have extra money near the end I would rather SEE them enjoy it while I’m still living. Maybe it’s a family trip, maybe they need money for their home/children whatever but unless I die suddenly in which case my kids would get money from life insurance, then I have no intention of leaving an inheritance.

    • John Schmoll says:

      I can definitely see the thinking behind that Catherine. I’d love to be able to see our kiddos and their potential families enjoy/put to use what has been given to them. I think it’s a great alternative to consider.

  • Mr. Utopia @ Personal Finance Utopia says:

    Come on, there is no choice to be made between a $100 million mansion and a $200 one! The $100 million one is obviously a decrepit shack 😉

    I totally agree. Having that much inheritance without the financial literacy to manage it is a bad recipe. Pretty sure I won’t ever have to worry about that with my kids, but it is still interesting to imagine the “problems” of the uber wealthy.

    • John Schmoll says:

      Ha ha, very true. 😉

      Yea, it’s not something I’m worried about with our kids – though they likely won’t be getting tens of millions given to them anyway.

  • Kim@Eyesonthedollar says:

    When I read this it for some reason made me think of Tori Spelling. I made the mistake of clicking on a story about her husband not paying child support and got the full report about her claiming to be living paycheck to paycheck. Her Dad only left her $800K when he died and she can’t believe her Mom won’t fork over more money! Maybe there is a reason Mom won’t bail her out. If she’s already blown through $800,000 in a few years, what’s to stop her from blowing through millions?

    It really doesn’t matter how much you leave your kids of don’t leave your kids. If you’ve taught them to be financially literate, an inheritance would be icing on the cake, but they’d be fine regardless.

    To me nothing could be worse than having your kids sitting around waiting for you to kick the bucket so they could get their hands on your money.

    • John Schmoll says:

      Ha about Tori Spelling! I seem to remember hearing about her having issues with her Mom about what her Dad left. I think there are far worse things than to inherit $800k, though who knows what really happened.

      I know, I think that would be horrible. Of course we want to be able to help our kids and their potential families – but talk about a messed up family to have that going on.

  • Kayla @ The Jenny Pincher says:

    An inheritance would be nice, but it can definitely cause problems if you don’t use the money wisely or you blow it all and get yourself in financial trouble because you think you have all the money in the world.

  • DC @ Young Adult Money says:

    “But what if I leave TOO much money?!?” *Eye Roll* I can’t help but laugh at the problems of the 1%. Whether you leave your kid $500k or $50M, if they are responsible it will grow; if not, they will spend most of it.

  • Mrs. Frugalwoods says:

    I think this relates to the adage of ‘money can’t buy happiness’–it also can’t buy sound financial sense. I have to imagine, too, that inheriting a ton of money and not experiencing the joys of scraping by in your early adulthood would have the potential to poison your relationship with money for life. It’d probably be tough to embrace joyful frugality, for one :).

    I’m in total agreement with you on the importance of teaching our kids financial literacy–we do them such a disservice by not including it in standard curricula, so I hope to fill in the gaps as a parent!

    • John Schmoll says:

      Excellent point Mrs. FW. I know it was true of me when I was forced to embrace it while paying off debt. Yep, it should definitely be included in standard curricula. It can only help them, and society as a whole, in the long run.

  • Hannah says:

    I feel like my grandparents have done a great job managing a “pre-inheritance.” They paid for ten grandkids to graduate from college. This has a profound generational wealth effect (maybe even more profound than they knew when they set up the plan 30 years ago), and it was a gift to both my parents and to us.

    This is something similar that I would like to be able to pass onto my kids. A solid debt free start to adult life is a better gift than an inheritance later in life in my opinion.

    • John Schmoll says:

      Wow, that’s awesome Hannah! I’d love to be able to do something like that. Talk about having something tangible to see not only the gift given but realizing it also provides a great opportunity that can serve you for years.

  • Shannon @ Financially Blonde says:

    It’s funny because I certainly see this a lot with a number of my older clients and it’s amazing how they are pretty much split in half. People either want to leave a bunch of money to their kids or charities or nothing. When I was working at my old firm, I actually had to help with the structuring of this inheritance that would happen if this billionaire client of the bank passed. It was amazing how much bells and whistles were put together to try to avoid the tax penalties on the sum of money that would pass on.

    • John Schmoll says:

      I saw a bit of that in my former day job, but can only imagine you saw a lot of it Shannon. It doesn’t surprise me one bit to see those extremes since it’s combining money and family. 😉

  • Andrew@LivingRichCheaply says:

    I like what Buffet said about this: “a very rich person should leave his kids enough to do anything but not enough to do nothing.”

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