How Can Inheritors Redistribute Wealth?
Posted on April 2, 2024 by Katherine Fox.
How Can Inheritors Redistribute Wealth?
What do inheritors need to know about redistributing wealth?
Not everyone who will receive a large inheritance wants to use the money for themselves. Some inheritors want to redistribute their inheritance to promote a more fair and just society and the equal distribution of wealth, land, and power in the United States.
It’s more common that people think that inheritors feel guilt about inheriting wealth, don’t want to be associated with how family wealth was generated, or are content with their lives and don’t need millions of dollars to feel fulfilled and enriched.
Whatever the reason for wanting to give your inheritance away, there is no escaping the responsibility of a huge amount of inherited wealth.
Even if you want to give away a multi-million dollar inheritance within the first year or two of inheriting, you still will need to make a plan to give away money in line with your values and in a way that can create real impact in the world around you.
Giving money away randomly without any plan is not only a waste of an opportunity, it robs you of a chance to feel like you created something positive and good with an inheritance you don’t want.
If you’re interested in building a plan to redistribute some or all of your inheritance, reach out to Katherine to discuss how she can help you figure out how much is “enough” and build a plan to give the remainder of your inheritance away in line with your values.
And if you’re not ready to commit, sign up for the Sunnybranch newsletter to get more updates on the inheritance topics you need to know and read on to learn what it means to redistribute wealth after receiving an inheritance.
What is wealth redistribution?
In a broad sense, wealth redistribution refers to the process of reallocating resources from historically advantaged groups to historically disadvantaged groups. American society practices some form of wealth redistribution through:
Progressive taxation used to fund social services including healthcare, education, and housing assistance for historically disadvantaged communities.
Social welfare programs that provide financial assistance, goods, or services to economically disadvantaged populations.
Local, State, and Federal government programs to promote economic equality.
How Can Inheritors Redistribute Wealth?
What is wealth redistribution?
But huge jumps in income and wealth inequality across the United States over the past several years demonstrate that governmental wealth redistribution is not enough to create a just and equal society.
Systemic racism, social injustice, and preferential governmental policies for the wealthy, including the capital gains tax rate, the step up in basis, and preferential tax rates for real estate investors, contribute to growing inequality in the United States.
Frustrated with the current system, many inheritors are turning to their own wealth to create a more just and inclusive vision for the United States.
How can inheritors redistribute or give away inherited wealth?
Inheritors interested in wealth redistribution can focus on giving away some or all of their inheritance to causes that promote a more equitable distribution of society’s resources, support the advancement of communities of color and economically disadvantaged groups, or restore and protect natural resources, among other causes.
Inheritors may choose to give away some or all of their wealth to nonprofits, individuals, or political causes.
Inheritors may choose to invest some or all of their wealth in below-market or no-return investments that have positive social and environmental impact.
Inheritors may have a mix of market rate ESG or Impact Investments in their portfolio in addition to inherited wealth earmarked for redistribution.
What does it mean to redistribute an inheritance?
Redistributing an inheritance can mean different things to different people. It may mean:
Giving some or all of an inheritance away to other family members or friends who have a greater need for money.
Building a plan to give some or all of an inheritance away to nonprofit organizations working in areas closely aligned with an inheritor’s values.
Focusing on giving money away as mutual aid - giving money directly to individuals to overcome the social, financial, or political obstacles to meeting their needs.
Investing in the “Solidarity Economy” - prioritizing investments in opportunities that may not return capital but contribute to a just and sustainable economy that values people and the planet over endless profit and growth.
Making “restorative investments” that focus on sharing and redirecting power to promote collective well being and social inequity and correct systemic injustices traditional investments perpetrate on communities of color and economically disadvantaged communities.
An individual plan to redistribute inherited wealth may include any or all of these opportunities and may change in scope as an inheritor learns and grows in the process of wealth redistribution.
LEARN MORE ABOUT MANAGING AN INHERITANCE
How can I redistribute wealth from an inheritance?
Deciding how to redistribute wealth from an inheritance is an intensely personal process.
Walking down this path will mean explaining to many people why you don’t buy into the concept of amassing individual or family wealth.
It means you need to get serious about:
Defining your own version of “enough”
Establishing your risk tolerance
Educating yourself about how to fund causes to advance a vision for a more just and equal society.
In many ways, it is MUCH harder than keeping an inheritance and investing it traditionally.
How you distribute wealth is up to you. Whatever path you choose, it is best to build a supportive community around you.
That may be through an advisor like Sunnybranch, who supports inheritors as they build plans to redistribute some or all of their inherited wealth.
It may be through a group of like-minded individuals like Resource Generation, a multiracial membership community of young people with wealth and/or class privilege committed to the equitable distribution of wealth, land, and power.
Or, it may be through your community and network.
Whatever path you choose, the initial steps of redistributing wealth from an inheritance are the same:
1.iUnderstand how much is “enough” and how much wealth you have available to redistribute.
You may want to give away all of your inherited wealth. But most of us still function within the capitalist system. We need a place to live, food to eat, healthcare, and the ability to support our families.
Deciding how much is “enough” for you to maintain your ideal standard of living defines how much money you have available to redistribute and is the first step in your journey.
2. Identify the impact you want to create.
Some inheritors want to give all their money away to nonprofits.
Some want to give directly to individuals.
Some want to focus on creating change by donating to political candidates or causes.
You may have a specific focus area like regenerative agriculture, supporting BIPOC business, or protecting LGBTQIA+rights.
Or, you may be more generally interested in creating a more just and equitable system within your local community.
Whether you drill down into one or many areas of focus, it is essential to know what kind of change you want to create with your inherited wealth.
This knowledge forms your personal wealth redistribution mission statement that will be used to inspire and guide your giving.
If you have any interest in redistributing inherited or earned wealth, reach out to Katherine to schedule a time to chat and learn more about how Sunnybranch can help connect you with other inheritors looking to redistribute wealth in service of a more just and equal society.
Let’s take the next step together
Understanding how to redistribute inherited wealth is not easy. Beneficiaries can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, you can download The 20 Inheritance Terms you Need to Know, or reach out to Katherine Fox, CFP® and CAP®, a financial planner for inheritors to learn how Sunnybranch can help you build a plan to redistribute wealth from an inheritance.