The great billionaire wealth transfer means people born very, very rich are going to stay very, very rich.
Whizy Kim is a reporter covering how the world’s wealthiest people wield influence, including the policies and cultural norms they help forge. Before joining Vox, she was a senior writer at Refinery29.
In late 2023, the richest woman in the world became a centibillionaire. But she didn’t get there by building an online shopping empire or by selling sleek EVs. She did it the good old-fashioned way: by inheriting it.
The scion of the French beauty brand L’Oréal, Françoise Bettencourt Meyers saw the value of her stake in the company shoot up during the rush of cosmetics and luxury fashion spending that’s taken place in the last few years. She’s far from alone in receiving billions from a parent. A recent report from the investment bank UBS highlighted a milestone: In 2023, for the first time in the nine years it’s been publishing this data, inherited billionaire wealth outstripped new billionaire wealth.
Billionaires have been minted at a dizzying pace in the last few decades — in 1987 Forbes counted 140, while in 2023 the tally was 2,640 — and we’ve now returned to the point in the cycle where enormous piles of wealth are passed on to the next generation. “This is how wealth dynasties are formed,” says Chuck Collins, director of the Program on Inequality and the Common Good at the left-leaning think tank Institute for Policy Studies. The only thing that’s new in 2024 is that the piles of money are bigger than ever.
Not only are there more billionaires today, their average wealth keeps ticking up too, thanks to historic stock market returns. On top of that, heirs are receiving wealth transfers earlier in life, rather than waiting for the death or near death of a family member. All this underscores the truth that having money remains the best way to get more money. Perhaps there’s nowhere that’s truer than in the US, home to the most billionaires, despite the pervasive myth of hardscrabble, self-made entrepreneurs climbing to the top of the socioeconomic ladder. If you’re born poor, you’re likely to stay poor; if you’re born super rich, you’ll probably get even richer.
What do billionaires do with their riches anyway?
Many heirs are involved with the family business in some way, often weaving in and out of it. Bettencourt Meyers, the 70-year-old L’Oréal heir, sits on the company’s board but mostly chooses to live a quiet life as a writer who enjoys playing the piano. America’s richest heirs, the Waltons of Walmart fortune, collectively command almost $250 billion. Rob, the eldest son of the founder, was a longtime chair of Walmart’s board of directors. In 2022, he spearheaded a family effort to buy the Denver Broncos. Jim, the youngest son, is the former CEO and current board chair of the family-owned bank. Alice, the only daughter, collects art (she even founded her own museum) and is soon opening a health institute and medical school. Their family foundation has mostly prioritized expanding charter schools.
Whatever heirs do with their hand-me-downs, chances are they’ll stay extremely rich — if not grow much richer. Though there are a surprising number of proverbs about the “third-generation curse” in which grandchildren fritter away the family fortune, when you inherit billions with a B, the real challenge appears to be spending that largesse down. The same goes for newly minted billionaires: Just look at MacKenzie Scott, whose wealth comes from her marriage to Amazon founder Jeff Bezos. She has given away over $16 billion to charity since 2019, when her net worth was about $38 billion. As of January 2024, she was worth more than $41 billion.
This is by and large a testament to the blockbuster stock market returns shareholders have received in recent decades. If you invested $10,000 in 1980 into the S&P 500 — a stock index tracking the 500 biggest companies on the market — it would have amounted to $760,000 in 2018. Alongside the explosion of double- and even triple-digit billionaires, managing wealth has become a professionalized industry. We’ve seen an explosion of so-called family offices, whose employees work full time on preserving and growing a single clan’s assets. A 2021 Institute of Policy Studies report on American wealth dynasties found that 27 of the top 50 richest families on Forbes’ 2020 Billion-Dollar Dynasties list were already represented on the magazine’s list of 400 richest Americans in 1983 — and their wealth, collectively, had multiplied more than tenfold since then.
Don’t hold your breath for an onslaught of billionaire heirs suddenly giving their inheritances away for the betterment of society. One insight from the UBS report is that heirs tend to be much less interested in philanthropy than first-gen billionaires. A theory as to why, according to Collins, is that “the first generation has some confidence in their ability to create wealth,” while the second generation doesn’t. “We know that the second generation, third generation are more concerned about protecting wealth than creating it,” he continues. “They invest a lot in wealth defense; they invest a lot in lobbying.” That means opposing any wealth tax or income tax hikes on the rich, or fighting regulations that would close loopholes that have long allowed billionaires to minimize what they owe to the government. It’s a sign that “the tax system on wealth has become more optional,” says Collins.
The ultrarich are passing money down to their kids earlier out of fear
There are a lot of reasons why ultrarich parents might be handing over some of their net worth — whether it’s via cash, stocks, a nice piece of property, a family business, or an art collection — sooner rather than later. Most of them involve fear of how their wealth might be lost.
For one, there’s the gnawing anxiety that estate tax and trust laws could tighten up. Circumstances have been pretty friendly for transferring wealth (in 2024, the first $13.6 million being passed on is completely exempt from the federal estate tax). But that could, in theory, change. The rich are well aware of the mounting political hunger to address yawning wealth inequality in the US, including by implementing a wealth tax that would apply to their assets (which they have a lot of) rather than just taxing income (which they tend to rely much less on).
The wealth-transfer rush may also have to do with a different kind of fear. Some ultrarich are “fearful of what the next generation will do with it,” says Michael Kosnitzky, co-chair of the law firm Pillsbury Winthrop Shaw Pittman’s Private Client & Family Office practice group. “There have always been differences in how older and younger generations view wealth. But I believe that today there are very profound differences in how the next generation thinks about wealth and money. And the older generation believes that there is a need to get ahead of that now.”
There are trusts that simply stop heirs from impulsively wasting their money; some feel that “the next generation just doesn’t have the work ethic,” says Kosnitzky. But parents transferring wealth earlier is another way to proactively control how it’s spent because they’ll still be alive to see it used. Predecessor and heir often don’t see eye to eye on the best use of a fortune — whether it’s how to run the family business, what political causes to donate to, or, in some cases, whether keeping such a great fortune is even ethical or should be given away.
How billionaires shrink our opportunities
Getting an inheritance remains a rarity in the US. As of 2022, data from the Federal Reserve shows, only about a fifth of American households had ever received an inheritance. According to New York University professor Edward Wolff, the most common inheritance amount as of a few years ago was between $10,000 and $50,000.
The Realtime Inequality tracker indicates that the bottom 50 percent of American adults — about 125 million people — collectively owned about $1.1 trillion as of January 2023. That’s about how much the eight richest people in the US own together, based on their current net worth listed on Forbes. This is despite the fact that the wealth of the bottom 50 percent doubled in the past few years.
The immense wealth of billionaires is not trickling down. It just gets passed to a handful of people from generation to generation. And this closed loop has repercussions on the rest of society. Economic research shows that high wealth inequality coincides with lower intergenerational mobility, meaning the presence of a lot of really rich people goes hand in hand with ordinary people struggling to do better financially than their parents did — an observation dubbed the Great Gatsby Curve. According to research by City University of New York economist Miles Corak, wealth chasms make it more likely for “family background to play a stronger role” in determining your success in adulthood, with your “own hard work playing a commensurately weaker role.”
For all that America is championed as a land of opportunities and bootstraps, the hundreds of billionaires that have popped up here since the ’80s may actually mean your hustle and grind matter less today.
According to economist Salvatore Morelli, director of the GC Wealth Project, the US once had a relatively low incidence of inheritance compared to other developed countries, but it has started to shift to a “European level” of inheritance. The gap between the haves and have-nots shapes “the opportunity and the chances that people start with in their life,” he tells Vox. Examples of unequal opportunities include things like education: You might have the grades to attend an Ivy League school, but if someone’s parent is a billionaire who can outspend yours to hire the most expensive college consultants and even make a generous donation to the school, that heir may just snatch your spot. With an exploding number of ultrarich families in the US, the bar for having a chance at financial success — even a slim chance — keeps getting raised.
It seems like at some point, this inequality will become impossible to bear — an “oligarchy tipping point,” Collins calls it — due to too much instability and polarization.
But rather than become disillusioned with the idea of fairness, growing inequality may actually lead to people believing more strongly that society is fair, according to research by sociologist Jonathan Mijs. The theory goes that inequality is so great that it needs similarly great justification — something like believing the explosion of American billionaires proves how much they’ve been working harder, innovating harder, being geniuses harder than ever before. The American dream and the idea that so many “self-made” rich people in the US went from rags to riches may paradoxically make Americans more accepting of inequality. Don’t let the reality that many of those billions come from Mom and Dad get in the way.