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Home Publications Wealth, gifts and estate planning at the end of life

Wealth, gifts and estate planning at the end of life

David Sturrock, Stefan Groot and Jan Möhlmann
IFS Working Paper W22/29

We quantify the size and tax-responsiveness of financial transfers made to heirs before death. The wealth of singles (including widows) with children declines substantially in anticipation of death. 92% of this decline is explained by transfers to children, while long-term care copayments can explain the remainder. Tax-reducing transfers are made across the wealth distribution and are very responsive to the tax rate. Using bunching and difference-in-bunching estimation and exploiting a reform to gift taxation, we estimate Frisch elasticities of gifts to the net-of-tax rate between 9, for those giving around €27,000, and 1, for those giving around €125,000.

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