Intergenerational transfers, asset management and tax avoidance

Ryo Ogawa ()
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Ryo Ogawa: Osaka Prefectural Government Institute for Advanced Industry Development

Economics Bulletin, 2009, vol. 29, issue 2, 1003-1018

Abstract: Taxpayers are considerably interested in tax planning for intergenerational transfers (inter vivos gifts and bequests) that minimize the payment of taxes. Nordblom and Ohlsson (2006) demonstrated that (1) altruistic parents avoid tax payment by changing the timing of transfers when inter vivos gifts are taxed differently from bequests and (2) tax avoidance ceases to exist if bequests and gifts from the same donor are jointly taxed. This paper aims to demonstrate that if the wealth management/investment behavior of the parent is taken into consideration, tax avoidance will persist even when gifts and bequests are jointly taxed. This is because parents dislike missing an opportunity to gain investment returns from the payment of taxes on gifts that exceed the exemption level.

Keywords: Tax avoidance; bequests; inheritances; inter vivos gifts; wealth management/investment (search for similar items in EconPapers)
JEL-codes: D1 H1 (search for similar items in EconPapers)
Date: 2009-05-16
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