Transmitting family wealth: the importance of bequests

Anette Reil-Held, University of Mannheim

This paper investigates the extent of actual and anticipated bequests and their impact on wealth, savings and well-being of givers and recipients. While the bequest motive is a key factor for understanding why people save, the empirical evidence is very mixed. The intention to bequeath might explain why the German elderly do not dissave which is in conflict to the standard theory of savings, the life-cycle hypothesis. The SAVE micro data show that the bequest motive is less important than other savings motives in Germany. Nevertheless, multivariate regressions reveal that households with a bequest motive save more than others. Surprisingly, this holds for the beneficiaries as well. Households who already received or expect an inheritance save more than others. We conclude that bequests positively influence the wealth accumulation and that they link together the different generations of a family in a non-negligible part of the population.