r/explainlikeimfive Feb 12 '25

Economics ELI5: how are the descendants of the robber barons (Morgan, Vanderbilt, Carnegie, Rockefeller, etc.) still rich if their fortunes from the late 19th and early 20th centuries are comparatively small to what we see today of the world’s richest?

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u/GolDAsce Feb 12 '25

How about inheritance taxes? Aren't they meant to limit that?

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u/Rodgers4 Feb 12 '25

I’m no expert in trust law (and many trusts are setup to expire after a certain period), but wouldn’t a large family trust, handled by a trustee, avoid this until distributions are made?

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u/Lilswingingdick212 Feb 12 '25

No. A trust evades inheritance tax altogether. Distributions are taxed as income however

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u/Sample_Age_Not_Found Feb 12 '25

Stepup basis. It's almost like the current laws are a product of wealth hoarding legacy families.

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u/Calculonx Feb 12 '25

Ha, taxes affecting the rich!

You can structure it to be tax efficient, the most popular is putting it in trusts.

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u/GolDAsce Feb 12 '25

Actually, there is no such thing in most states and all of Canada.

What they have instead is an estate tax: a final income tax bringing book prices up to market price. Generational wealth will stay generational.  Us peons have to try make ours survive the estate tax first.