Jan 01 2004

Gifts That Connect the Generations: A Role for Credit Unions


A recent Filene publication studied bequests and inheritances where the transfer takes place after the death of the giver. This research provides facts about gifts for which the transfer takes place during the lifetime of the giver.

Jinkook Lee
PhD, Professor of Consumer Science and Research Associate at the Center for Human Resources Research
Ohio State University
William A. Kelly, Jr.
Center for Credit Union Research
University of Wisconsin-Madison
Report Number 104

Executive Summary

The majority of credit union members over age 50 are making gifts to family members during their lifetimes. Credit union leaders need to think creatively about how they can facilitate this transfer of wealth between generations. Many members over the age of 50 would welcome special accounts for specific gift purposes. For example, investment funds might be used to guarantee a down payment on a house for a child or grandchild. By thinking creatively, credit unions could become the primary source of assistance when families consider these important issues.

What is the research about?

Here we report the results of research on inter vivo transfers of wealth between generations, which are transfers that take place while the giver is living. It complements the recent Filene study on bequests, or inheritances, which are transfers that take place after the death of the giver.

We find that such gifts are relatively common among most demographic groups, and that among people over fifty, those who are younger, with a life expectancy over ten years, and excellent health are most likely to make such gifts. In addition, those with higher income or higher net worth are more likely to make such gifts. However, many households of relatively modest means give significant inter vivo gifts.

What are the credit union implications?

The transfer of funds between generations presents a tremendous opportunity for new services by credit unions to serve both the givers and the receivers. Credit unions should establish and promote special accounts to facilitate transfers. Thinking creatively about ways to facilitate the transfer and appropriate use of gifts, and to market these services, offers special opportunities to build relationships with existing members as well as to bring in new members.