Inheritance Avalanche Coming As World's Older Billionaires Set To Give $5.2 Trillion To Heirs In The Next 20 To 30 Years

According to a report from UBS, the world's billionaires gained more wealth through inheritance than entrepreneurship for the first time in years, according to a report from UBS.

The study found more people who achieved billionaire status in the past year received that money through inheritance more than through investments or entrepreneurial gains. This marks a shift toward dynastic wealth, according to the UBS Billionaire Ambitions Report. 

The UBS study looked at 137 people globally who attained billionaire status in a 12-month period and found that 53 of them collectively inherited $150.8 billion. This sum surpasses the $140.7 billion earned by the 84 new self-made billionaires during the same time frame. The report marks the first time in the nine-year history of the UBS Billionaire Ambitions Report that inheritances have exceeded self-made wealth. 

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The study predicts a $5.2 trillion will flow from older billionaires to heirs in the next 20 to 30 years, a number that's about the same as Japan's gross domestic product (GDP). 

The UBS report notes a slow initial public offering (IPO) market in 2022 and through 2023 meant fewer opportunities for entrepreneurs to see massive net worth gains. 

"Economic, geopolitical and policy uncertainty have been a challenge to entrepreneurial wealth creation of late," Max Kunkel, chief investment officer for family and institutional wealth management clients at UBS, said in a statement.

One of the biggest wealth transfers occurred in 1992 when Walmart Inc. Founder Sam Walton died, and his wife and four children inherited vast sums. As of Nov. 5, Walton's children, Jim Walton, Rob Walton and Alice Walton are worth $65.5 billion, $64.8 billion and $60.6 billion, respectively. Sam Walton's fourth child John died in 2005. John Walton's only child and Sam Walton's grandson Lukas Walton inherited much of his fortune and is now worth $23.3 billion. 

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Another example of dynastic wealth comes from Bernard Arnault, head of LVMH Moet Hennessy Louis Vuitton (LVMH). He is the second-richest person in the world with a net worth of $191.3 billion as of Dec. 5. He recently put in place a limited partnership arrangement that ensures family control of the company for decades. All of his children hold management positions among the various LVMH brands and stand to receive massive sums from future inheritance. 

Warren Buffett is an opponent of dynastic wealth, as he has repeatedly stated he will not leave significant sums to his children and instead will donate the majority of his wealth to charity. He once told his daughter, "Go to the bank and do it like everyone else" when she asked him for a loan to remodel her home. Buffett's right-hand man, the recently departed Charlie Munger, also followed a frugal ethos, giving billions to charity throughout his lifetime, and frequently spoke against dynastic wealth. 

Surveys conducted to inform the study found a gap between the philanthropic intentions of first-generation billionaires and the inheritor generation. Of those surveyed, 68% of the first generation noted philanthropic efforts as a core part of their legacy, compared to just 32% of the next generation. 

UBS compiled data between June and September from 79 respondents who were among the bank's worldwide clients.

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