Inheritocracy - The Bank of Mom and Dad

Many Michigan families are facing a new kind of financial reality. Young adults often rely on parents to help buy homes, pay off student loans, or afford childcare. Meanwhile, older parents are living longer—and facing potential nursing home costs that can reach well over $120,000 per year. Together, these pressures shape how money moves between generations and what children may one day inherit.

What “Inheritocracy” Means

“Inheritocracy” captures a growing reality: for many people today, the path to success depends less on hard work and more on what their parents own. In families with strong financial footing, children often receive valuable head starts—help with a down payment, tuition support, or capital to launch a business. Others, through no fault of their own, face a steeper climb toward financial security.

Unlike success earned through creativity and persistence, this kind of private advantage rests on what philosophers call a “morally arbitrary” factor—the family you happen to be born into. And that’s where society is heading. As parental wealth becomes a greater determinant of opportunity, merit takes a back seat, and we move closer to an inheritocracy than a meritocracy.

The Coming Multitrillion-Dollar Wealth Transfer

This isn’t just a Michigan issue—it’s part of a global shift. As baby boomers (those born between 1946 and 1964) reach the later stages of life, the world is entering one of the largest wealth transfers in history. Economists estimate that between $15 trillion and $84 trillion will change hands in the United States over the next two decades.

In many families, this wealth will be passed along in two main ways:

• During life, as financial gifts or loans to help children buy homes or pay for education—the so-called “Bank of Mom and Dad.”
• After death, as inheritances that pass on homes, savings, and investments to the next generation.

This massive shift won’t affect everyone equally. In Michigan, where the costs of housing, education, and healthcare keep rising, this uneven inheritance could shape entire communities and future opportunities.

Why It Matters for Michigan Families

Inheritocracy raises tough questions for families trying to plan wisely and fairly. Michigan nursing home care can exceed $150,000 per year per spouse, and many people require several years of care. Medicaid can help, but it’s a means-tested program. Without proper planning, families may need to spend down nearly all their assets before qualifying.

Without legal guidance, the savings meant for children may go toward nursing home costs instead. But with a thoughtful, Michigan-specific estate and Medicaid plan, families can maintain financial stability, ensure quality care, and still preserve a legacy for future generations.

Planning Steps That Can Help

Taking action now can protect both your care and your legacy:

• Medicaid planning. The right legal strategies can preserve assets while still achieving Medicaid eligibility.
• Careful gifting. Helping children is generous, but the timing and size of gifts can affect Medicaid eligibility.
• Updated estate plans. Wills, powers of attorney, medical directives, and trusts should be Michigan-specific and tailored to your current health, family, and goals, because one-size-fits-all DIY forms often end up causing more issues than they fix. 
• Clear family communication. Effectively planning how and when children receive help reduces misunderstandings and resentment later.

How Thomas Legal, PLLC Can Help

Estate planning in an inheritocracy is about more than money—it’s about values, fairness, and care. At Thomas Legal, PLLC, we help Michigan families prepare for this unprecedented wealth transfer with customized estate plans, Medicaid strategies, and family-centered legal guidance.

The coming decades will redefine how wealth and responsibility flow between generations. A thoughtful plan today can help your family navigate those changes.