The Best Wealth Is the One You Accumulate, Not Inherit
Deep dive into wealth that people fight for inheritance
I had heard about inheritance for a long time, but I never understood it until death knocked at home. When my father passed away, our family went through the inheritance process. And I understood why so many of these processes end in family fights and court cases.
An inheritance is what the dead leave to the living. It can be tangible or intangible, given to close family or even strangers. The sad part is that close family members expect the inheritance whether they were included or not. We had a minor taste of different parties showing interest in his estate.
One day I asked one of my siblings: so what is there to inherit anyway? I got no clear answer. The moment I asked, the energy in the room changed, as if I had broken some unspoken rule. Then I asked what our father’s wealth was. That topic was dismissed so fast I got the memo.
I learned that day never to dig deep into matters of inheritance. First, most people do not know the wealth of the dead. What they see is what they want. Second, if your parent or relative is not visibly wealthy, there is usually nothing significant to inherit. My father worked 27 years in banking, his last post at an international bank. Yet there we were, wondering about his wealth.
That curiosity planted a seed in me. The entire inheritance process rests on wealth. So the questions came: What is wealth? What makes a family rich or poor? What makes a country rich or poor? I did you a favour and went down the rabbit hole to learn everything you need to know to understand wealth.
I hope this knowledge helps you not to demand wealth and inheritance from your family, but to create your own wealth — and to plan better for what you will leave, and to whom, when you die. Let us dive in.
According to Investopedia, wealth measures the value of all the assets of worth owned by a person, community, company, or country. It is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts. Essentially, wealth is the accumulation of scarce resources.
Four key terms build this definition:
Assets and debts
Person, community, company, country
Total market value
Scarce resources
Let us start with assets
Assets are things that have value and can be used to create more value. Land is an asset. It has value, it can be sold, it can be farmed to produce crops that can be sold. A car is an asset. It has value, it can be sold, it can transport goods or offer services people pay for.
Money is an asset because it can buy other assets and create more value. My father had houses, cars, and cash in the bank when he passed away. Those were part of his assets.
Land and cars are tangible assets. You can see and touch them, and they make up the majority of assets. Technology, patents, and goodwill are intangible assets. No one can see them, but they create value. If you have a technology, you can sell it to someone and add value. If you have a brand or a reputation, you can use it to get things and go places.
My father spent 27 years in the corporate world, so his surname was known around corporate circles. As his children bearing his name, we inherited goodwill that served us in various situations and opened doors that would otherwise have stayed shut. That is an intangible asset he left us: his good name.
Debts are things of value that someone borrows from another person with an agreement to return them in the future. When my father was building his last house, he took a loan from the bank. That was part of his debts. He also had a car from the office, given for official use and meant to be returned. That too was part of his debts.
Wealth is what remains after removing the debts from all the assets. For my father, that meant removing the bank loan for the house and the office car. What remained was his wealth. I did not go deep into my father’s records, so he likely had more assets or debts than I know. That is the case for most families.
Let us look at the owners of assets
A person is any individual recognized in a country with an identity card or passport. As an adult citizen, you have the right to own assets. My father worked as a banker, earned his salary, and made his investments. Over his lifetime he accumulated houses, cars, land, and more. He legally owned everything under his name. When a person dies, they usually leave a will naming who takes their assets — often a spouse, children, or siblings.
A company is an organization registered by a person or a group of people to operate as another person in the eyes of the law. It gets the same rights a person has to own assets, take debts, and pay taxes. Most of what you buy or consume comes from companies. If you are reading this on a phone, a company made that phone, a telecommunication company sold you the SIM card and the internet bundle, and a company made the clothes you are wearing.
A community is a group of people with a shared background or goal. It can be faith based, social based, or political based. Communities can legally own assets and take debts in their daily operations. Churches, mosques, tribes, and clans can hold assets and debts under their names.
A government owns and protects on behalf of the citizens of its country. Every natural asset in the country falls under the government, for the goal of improving people’s lives. A government can take debts under its name for projects that create value and grow its citizens.
Let us look at market value and scarce resources
Market value is the price an asset would fetch in the marketplace. Earlier we said assets are part of wealth. Those assets carry a price people would pay if they were for sale.
My father’s house had a price the market said it was worth at the time. He had a Nissan X-Trail, and we could find its market price if we wanted to sell. Every asset that remains after removing the debts has a market value.
In the past, people traded through barter — things for things. Today people use money as a medium of exchange. If we had needed to sell my father’s car back then, we would have needed someone who wanted the car and had something we wanted, maybe food or clothes. Today the person brings the cash and we hand over the car.
Because money became the medium of exchange, people started believing that wealth is money. I am here to help you avoid that mistake. Money is a medium of exchange used to transfer wealth from one party to another, or from one asset to another.
We could have sold our father’s house and taken the cash. That would have transferred our wealth from real estate into cash in the bank. We could then have used that cash to buy plots in a village for farming. That would have transferred the wealth from cash into agricultural land.
The main purpose of money is exchange. In transition, cash becomes part of wealth because it has value. Not everyone with money has wealth, but every wealth can be turned into money.
The last thing you need to know: wealth applies only to scarce resources. Many things in life have value but are not scarce — air, water, and the like. Things that are scarce in production, cannot be duplicated, or will run out carry the value that puts them in the wealth category.
There are also things that are scarce and valuable but fall outside the normal definition of wealth, because money cannot transfer them. Happiness, health, and relationships are demanded by everyone, yet we cannot count them as part of someone’s wealth.
No one mentioned my father’s happiness, his health, or the relationships he built as things we could inherit. But I know those things are cherished, and most of us believe they will come after we achieve the first definition of wealth. Because they matter so much in our lives, our next session will focus on good living: happiness, health, relationships, and meaningful work.
I hope you now have a better idea of what wealth is. You can start thinking about your own wealth, and you can ask the right questions the next time someone talks about inheritance.
May you be happy, May you be healthy, May you be free from suffering.
Watushule We think, so we become.