Bequest and Tax Planning: Evidence From Estate Tax Returns

No 12701, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I study bequest and wealth accumulation behavior of the wealthy (subject to the estate tax) shortly before death. The onset of a terminal illness leads to a very significant reduction in the value of estates reported on tax returns - 15 to 20% with illness lasting "months to years" and about 5 to 10% in case of illness reported as lasting "days to weeks". I provide evidence suggesting that these findings cannot be explained by real shocks to net worth such as due to medical expenses or lost income, but instead reflect "deathbed" estate planning. The results suggest that wealthy individuals actively care about disposition of their estates, but that this preference is dominated by the desire to hold on to their wealth while alive.

JEL-codes: D12 D31 D91 H2 (search for similar items in EconPapers)
Date: 2006-11
New Economics Papers: this item is included in nep-pbe
Note: AG PE
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Citations: View citations in EconPapers (7)

Published in Quarterly Journal of Economics, 2007, 122(4), 1801-1854

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Journal Article: Bequest and Tax Planning: Evidence from Estate Tax Returns (2007)
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