Jan 01 2004

Inheritances: Who Expects to Leave Money to Heirs?

Report  
Number  
103

The purpose of the research is to provide factual information about the likelihood and size of inheritances. Credit unions can use this information to consider whether and how to offer trust services to their members.

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 103

Executive Summary

The prospect of a large intergenerational transfer of wealth in upcoming years has caught the attention of all financial institutions. The purpose of the research reported here is to provide factual information on potential bequests among people aged 50 years or older, a population of sufficient age to consider bequests. This information also provides a basis from which to design marketing strategies and plans for trust services.

What is the research about?

In this research we examine the likelihood that households over age 50 will leave a bequest of $10,000-plus or $100,000-plus. Data is taken from several longitudinal studies on aging sponsored by the National Institutes of Health (NIH). In assessing the influences of both financial and non-financial characteristics on the likelihood of leaving such bequests, we find that leaving bequests of these sizes is quite common. We develop marketing implications for credit unions considering whether to offer trust services. The best age range to focus on in marketing appears to be 50-60, preferably the early to mid-fifties. This focus also provides an opportunity to develop relationships with the beneficiaries, who are usually the children of those leaving a bequest.

What are the credit union implications?

Establishing a will and a trust generally requires the services of an attorney. However, most people need an attorney at infrequent intervals during their lifetimes. This suggests a potential credit union service of special value to members over 50. The credit union could select an appropriate attorney, arrange for educational classes on wills and trusts, and follow up with meetings with individual members to draw up and execute the necessary documents. A copy of these documents could be placed in a safety deposit box in the credit union.

Providing a place in the credit union where an attorney could meet with members would also be helpful. This could provide a more convenient, supportive, and less intimidating environment for many people than an attorney’s office. A credit union employee could assist members with follow-up as needed, such as changing beneficiary designations on life insurance and retirement plans to fit the needs of a trust.