June 20, 2002

My Naivete Shown Up Once Again: Strategic Bequests and the Benefits of Keeping Firm Hold on Your Money as Long as Your Heart Beats

Back when I was in graduate school Doug Bernheim, Andrei Shleifer, and Larry Summers wrote an article about the "manipulative bequest motive" for inheritances--how bequests are neither the result of people holding extra wealth in case they should live longer, nor because of their altruistic desire to better the circumstances of their descendants, but because if you are old the prospect of a bequest is one of the few tools you have to encourage your descendants to pay any attention to you.

At the time I thought that this was formal economics gone mad--that this was a sterile theoretical point of no practical importance. But here is yet another piece of evidence that I was hopelessly naive

| Andrew Tobias - Money and Other Subjects |

SAY IT ISN'T TRUE--Bob Kirkland: "Less Antman was quoted today as advising distributing assets to one's family prior to death. I had two great aunts of substantial means (neither left me anything). One had generously divided most of her assets among her nieces and nephews at least ten years prior to death, so the government wouldn't get it. Fortunately, she did reserve just enough to live modestly and support nursing home care. The other held on to every dime. She never talked about her will, other than to frequently express her hope that she had made the right decisions. Guess which one spent years nearly forgotten in a nursing home, and which one received the considerable attention of these same relatives til the day she died?

Posted by DeLong at June 20, 2002 10:19 AM


See "The Tragedy of King Lear" by one W. Shakespeare for further reflections on the unwisdom of premature distribution. : )

Posted by: Chris Bertram on June 20, 2002 11:07 AM

Aunti #2 obviously read her Robert Frost, or at least listened to the McNeil-Lehrer news hour


Posted by: jda on June 20, 2002 12:28 PM
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