Introduction

To assess the impact intergenerational wealth transfers have on society, inequality, and household wealth it is important to understand the characteristics of the households that have received either inheritances or substantial gifts. Building on earlier research undertaken by Lawless and Lynch (2017) and Morelli et al. (2021) which used HFCS 2013 data, this chapter investigates the patterns by which Irish households have received inheritances and gifts at any point up to 2020. The proportion of households who have received at least one inheritance or gift across different types of household is presented, along with the median values of these intergenerational wealth transfers. We compare the net wealth of households that have and have not received an inheritance or gift and assess the value of these transfers relative to household’s net wealth. The frequency and value of different types of assets transferred are also presented.

Results

Of Irish households, 36% have received at least one inheritance or substantial gift at some point in the past up to 2020. Of these intergenerational wealth transfers households were more likely to have received inheritances than gifts, with 30% having received an inheritance and 9% having received a gift. See Table 2.1.

The median value of intergenerational wealth transfers of recipient households was €80,200 in 2020. The median value of inheritances for recipient households was €99,200 and of gifts was €15,900. See Table 2.2.

Age of household reference person

The receipt of intergenerational wealth transfers is related to where households are in their life cycle, as older households have had more time to have received wealth transfer through inheritances and gifts in their lifetime. The age of the household reference person is used as a proxy for where each household is in their life cycle. As illustrated in Figure 2.1 it is evident that older households were more likely to have received at least one inheritance or gift. Of households whose reference person is aged under 35 or aged 35 to 44, 27% of households in each group have received a transfer. This compares to 46% and 44% of those aged 55 to 64 and 65 or above respectively.

Older households were more likely to report having received an inheritance, with 14% of households whose reference person was under 35 years having received an inheritance, increasing to 43% for households whose reference person was 55 to 64.

Younger households were more likely to have received a gift with 13% of households whose reference person was aged under 35 having received a gift and 15% of those aged 35 to 44 having received a gift. This decreases for older households with 4% of households aged 65 or above having received a gift. See Figure 2.1 and Table 2.1.

The greater prevalence of gifts in younger households is, to some extent, due to a recency bias, where respondents are less likely to recall having received substantial gifts from longer ago. Thus, older households are less likely to recall and report a gift received decades ago. This is evident in Figure 1.3 where the frequency of gifts deceases the further back in time you go.

The median value of inheritances and gifts of recipient households increases as the age of the household reference person increases, as the further into the household’s life cycle the greater scope for the accumulation of intergenerational wealth transfers.

Of households whose reference person was under 35 years the median value of inheritances was €31,500. This increased for each age group to €118,000 for household’s whose reference person was aged 65 or above.

The relationship between age and the median value of gifts was not so clear, as households whose reference person was age 45 to 54 had the highest median gift value of €28,400 and those whose reference person was 55 to 64 had the lowest value of €9,900. The value of gifts in the various age groups is likely affected by recency bias. See Figure 2.2 and Table 2.2.

Tenure status

Homeowners were over twice as likely as renters to have received an intergenerational wealth transfer (44% compared to 18%). The value of transfers was also much greater on average for owner-occupiers compared to renters, with median values of €98,300 and €15,200 respectively. See Figure 2.3, Table 2.1 and Table 2.2.

Household composition

When the instances of intergenerational wealth transfers are assessed by household composition, it is evident that households with at least one adult aged 65 or above and households without children under 18 years were more likely to have received an inheritance or gift at some stage. In Figure 2.4 we can see that households with 2 adults, at least 1 aged 65 or above and 1 adult households aged 65 or above were most likely to have received a wealth transfer, with 43% of both household types having received at least one inheritance or gift.

The three groups least likely to have received a transfer were households with children under 18 years. Single adult households with children under 18 were least likely to have received a transfer (13%). However, excluding inheritances, two adult households with children were most likely to have received a gift (15%), followed by two adult households without children (12%). Single adult households aged 65 or above were least likely to have received a gift (2%). See Figure 2.4 and Table 2.1.

Similarly, younger recipient households and those without children have lower median values of inheritances and gifts than older households. See and Table 2.2.

Education of household reference person

The highest level of education attained by the household reference person was also generally a strong predictor of receiving an intergenerational wealth transfer. Four in ten (41%) households whose reference person has a highest education of third level degree or above reported receiving an inheritance or gift, compared to three in ten of those with a highest education of lower secondary (30%) or primary education or below (32%). See Figure 2.5 and Table 2.1.

As older households were more likely to have a lower level of educational attainment on average, median values of inheritances and gifts were higher for lower educated households. Households with a highest level of education of third level degree or above have the lowest median value of wealth transfers (€53,200). These households were likely to be younger and thus have the highest rate of gift receipts. Households whose reference person had a highest education level of primary or below had a median inheritance or gift of €103,600. See Figure 2.5 and Table 2.2.

Across the country, 37% of households in the Southern and the Eastern and Midland regions have received inheritances or gifts at some point, while 35% of households in the Northern and Western region were in receipt of wealth transfers. The most common type of wealth transfer was the transfer of homes and land in the Northern and Western region. In both the Southern and the Eastern and Midland regions, money was the most frequently transferred asset type. See Table 2.1.

The median value of inheritances and gifts for recipient households was highest in the Northern and Western region with a median value of €103,600. The equivalent values for households in the Southern and Eastern and Midland regions was €80,600 and €63,400 respectively. The higher value of inheritances and gifts in the Northern and Western region was due to the high prevalence of transfers of HMRs and land, compared to the greater relative frequency of money transfers in the other two regions. See Map 2.1 and Table 2.2.

Household wealth is an important economic measure in assessing the economic well-being and resilience of households. It is thus important to better understand how wealth is accumulated and whether intergenerational transfers of wealth are related to the accumulation of household wealth. As can been seen in Table 2.3, households that have received at least one inheritance or gift had a higher median net wealth value at State level and across all household characteristics presented. The median value of net wealth for recipient households was €334,100, two and half times the median net wealth value of households that had not received a transfer (€133,100).

Across the reference person age groups, the median net wealth of recipient households was higher than that of non-recipients. The net wealth of households whose reference person was 55 to 64 was €496,800 for recipient households, compared with €219,500 for households who had not received a transfer, a difference of €277,300. See Figure 2.6 and Table 2.3.

Analysis of the relationship between the value of intergenerational transfers and the net wealth of the household provides insight into the impact inheritances and gifts have on the net wealth of different household groups. Nationally, the current value of inheritances and gifts was 24% of the value of the net wealth of those recipient households.

Across the educational attainments of household reference persons, it is evident that the higher the education level the lower the value intergenerational transfers were relative to the net wealth of recipient households. Of households whose reference person had a highest level of education of primary or below, the relative value of inheritances and gifts was 58% of net wealth. This ratio decreased to 17% for those whose reference person had a third level degree or above. Thus, the net wealth of recipient households with higher education was determined less by inheritances and gifts when compared to households with lower education levels. See Figure 2.7 and Table 2.3.

Type of asset transfer

In Ireland, one in five (21%) households received money as an intergenerational wealth transfer; 8% received their household main residence (HMR); 7% received a non-HMR dwelling; 7% received land; 1% received business, securities and shares, life insurance and valuables; and 1% received vehicles or other assets.

Of households who received inheritances, 52% received money; 27% inherited their home, 22% received a non-HMR dwelling and 21% received land. Land had the highest median value of the asset types transferred with a median value of €176,300. HMRs were the next most valuable asset transferred with a median value of €175,000, while money had the lowest median value of €27,100. See Figure 2.8 and Table 2.4.