Jan 01 2004

Gifts That Connect the Generations: A Role for Credit Unions

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.

The study uses data from panel surveys sponsored by the National Institutes of Health (NIH) and conducted by the University of Michigan Survey Research Center. We have data on gifts of over $500 given by a representative sample of 14,410 households aged 50 or over, for the two year period, 1998-1999. The data also includes additional information about givers and recipients.

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.

Overall, about 30% of over-50 households make such gifts. Those who give generally give to about two people over a two-year period, usually to their children, with an average gift per person of about $5,800. Seventy percent of recipients are between 18 and 44 years old.

The study provides information on how the likelihood and amount of giving vary by personal and financial characteristics of the giver and by characteristics of the recipient. We also develop implications for credit unions, in the form of methods to facilitate this type of wealth transfer between generations.