Inter‐vivos Transfers and Exchange

Abstract

Most parents divide their bequests equally among their children, whereas inter‐vivos transfers are usually unequal. We propose that exchange is better for inducing inter‐vivos transfers than bequests. Inter‐vivos transfers can be adjusted quickly to the amount of care, are less costly than writing a will, and can be kept secret from other family members and the public. The results from national longitudinal data show that, as expected, if a parent gives any inter‐vivos transfers, she is more likely to give to children who provide informal care. Informal care has no effect on the equality of intended bequests.