General

if there are more rich people than poor people, then everyone would be average, and rich would cease to exist

From my limited understanding of it, some families have the ability to pay off a house but choose not to due to the tax deductions of having a mortgage. If the yearly payment for a house is less than the amount you get deducted for taxes, it might just be worth it to continue the loan (although this is very general and probably changes on a family's situation).

@zerofriends To answer your questions-

If your parents pay off the mortgage (bank loan) on their house, it becomes theirs, free and clear. They are the owners.
When they die, ownership passes to you as their heir and you'd own it free and clear.

But- there's more to owning a home.
You normally have to pay property taxes to your local government, usually based on the value of the home. If the taxes aren't paid the government can seize the house, sell it and pay the taxes with the proceeds of the sale.
You also have to pay utilities, water and sewer to the city, electricity, gas or other fuel for heating and cooling.
And it's almost essential to have homeowner's insurance which insures the house against being damaged or destroyed, and also covers you against liability if someone is injured on your property.
So there are some pretty massive costs involved in owning a house.

To answer the premise of your question, yes... some people become rich by inheriting money from their parents, either in cash or as property.
This is how Donald Trump got his start, and how the Koch Brothers (the richest Americans) started their empire. They got it from their fathers.
But it only happens to such a tiny number of people, it's statistically insignificant. Most people don't get rich by inheriting anything from their parents.

Keep in mind that most parents end up selling their homes when they're old enough to move in with family or to a retirement home, and they use the money from the home to sustain themselves for however many years they've left to live (estimating and stuff). If they're fortunate enough to have a pension plan or RRSP, then the financial stress isn't nearly as difficult, but not everyone has such benefits. This is only one contributing factor (not to mention majorly increasing health related costs in the USA as a person becomes old) to why you won't necessarily see hundreds of thousands of dollars given to you when your family passes.

It's a different story if a family member passes as a member of the working class, but typically in such situations the family is faced with a huge amount of debt to repay (not yet finished paying off the house+vehicles+other things).

Just some food for thought.

[quote=sezbeth]That's assuming every single family has something of monetary value to pass down.

Most Americans go through their life barely making what is considered middle class only to later live off of minimal social security benefits.

In the case of your parent's house, not every family is paying mortgages. Further, the real estate market has been the absolute worst for the last decade, so there's no real guarantee that your parents may even be able to pay off their house within the 20 years, depending on interest rates. Then factor in that some parents don't even pass down their wealth once they pass, let alone have much at all to begin with.

Family financial states are extremely dynamic and rarely come down to having a significant sum of money to pass down to their children once their older. It simply doesn't work as cut and dry as what you proposed.[/quote]

Here in Michigan, at least, housing is starting to boom. It's been much better than in recent years.

[quote=natalie]if you give $200,000 to someone who doesn't work or understand the importance of saving, it will be gone fast. people will dump money into investments, gambling, starting a business, a car or house, designer items, or extravagant vacations and have nothing left by the end of it if they don't make something out of themselves. inheriting can only do so much for you unless your parents are millionaires[/quote]

I agree with your point. However, I want to add onto that.

The thing I believe is that people are merely uneducated in one form or another. First of all, most simply, people are ignorant of various matters. Perhaps they were not smart enough to do well in school etc (myself included). I.e. if you spend all of your time studying instead of playing maplestory or going on basil. You'd probably be a bit smarter and be able to make more money if you spent that time studying instead of on video games or on forums. Furthermore people are ignorant in terms of investments and businesses sometimes. Instead of just diving into it, take time to learn how to invest and/or start a business. Most people don't do that. Hence the problem arises.

I mean there's nothing wrong with dumping money into investments for example. As that's how people make money through IRAs etc for retirement. Tons of people have done it. You just have to know how to do it correctly (study it and understand it beforehand!). If anything, saving money will help keep your money safe. However, as many others say, it takes money to make money.

[quote=natalie]if you give $200,000 to someone who doesn't work or understand the importance of saving, it will be gone fast. people will dump money into investments, gambling, starting a business, a car or house, designer items, or extravagant vacations and have nothing left by the end of it if they don't make something out of themselves. inheriting can only do so much for you unless your parents are millionaires[/quote]

i suppose, i guess im just too naive

if you give $200,000 to someone who doesn't work or understand the importance of saving, it will be gone fast. people will dump money into investments, gambling, starting a business, a car or house, designer items, or extravagant vacations and have nothing left by the end of it if they don't make something out of themselves. inheriting can only do so much for you unless your parents are millionaires

That's assuming every single family has something of monetary value to pass down.

Most Americans go through their life barely making what is considered middle class only to later live off of minimal social security benefits.

In the case of your parent's house, not every family is paying mortgages. Further, the real estate market has been the absolute worst for the last decade, so there's no real guarantee that your parents may even be able to pay off their house within the 20 years, depending on interest rates. Then factor in that some parents don't even pass down their wealth once they pass, let alone have much at all to begin with.

Family financial states are extremely dynamic and rarely come down to having a significant sum of money to pass down to their children once they're older. It simply doesn't work as cut and dry as what you proposed.

Most people are uneducated and don't understand how to spend their money responsibly.

But hey, as long as they're happy.

But, excuse me if I am wrong, having 200,000 doesnt necessarily equate to being rich and life has costs too. Not to mention that some parents dont pass in their possessions to their children.