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    The Impact of Health Shocks on Inter-vivos Transfers: Implications for Taxes and Public Transfers

    11 July 2024

    Microdata Access Grant 2022. Authors: Eduard Suari-Andreu, Max van Lent (Leiden University, Leiden Law School)

    The Dutch tax system redistributes money between citizens via taxes, subsidies, and social programs. An important share of these transfers are from the young (working people) towards the old (retired people). Besides these public transfers, there are also private transfer that redistribute money between generations. We study one important channel that redistributes wealth between generations: inter-vivos transfers (i.e. a gift or transfer made during the lifetime). Inter-vivos transfer are triggered by health shocks, for instance because people expect they will die soon and want to avoid their heirs to pay taxes, because they are altruistic towards their heirs, or as a means of payment for the provision on informal care. In our proposed research we aim to study the impact of parental health shocks on inter-vivos transfers of parents to their children, and the motives for these transfers. This will allow us to draw very relevant implications for the tax and transfer system.

    Photo by Recha Oktaviani on Unsplash