Inter Vivos Giving over the Lifecycle

Julie M. Zissimopoulos, RAND
Michael Hurd, RAND
James P. Smith, RAND

Inter vivos cash transfers and bequests among family members total hundreds of billions of dollars each year. They may equalize resources within a generation of a family as well as across family generations. Transfers delayed to the end of life may represent a significant motive for saving. We use longitudinal data from the Health and Retirement Study on inter vivos transfers that span up to twelve years to: describe financial transfers made by parents to children and their correlation with donor characteristics, and examine age patterns in giving behavior, the persistence of transfers, and how transfers change in response to changes in marital status, economic status and health. Our empirical analysis is motivated by a dynamic life-cycle model with inter vivos transfers as an argument in the utility function, which generates hypotheses about the age pattern of transfers and how mortality risk, risk aversion and economic resources affect giving behavior.