Inheritance in Contemporary America Angel, Jacqueline L. Published by Johns Hopkins University Press Angel, Jacqueline L. Inheritance in Contemporary America: The Social Dimensions of Giving across Generations. Johns Hopkins University Press, 2008. Project MUSE. doi:10.1353/book.3475. https://muse.jhu.edu/. For additional information about this book https://muse.jhu.edu/book/3475 [ Access provided at 3 Oct 2021 03:19 GMT with no institutional affiliation ] This work is licensed under a Creative Commons Attribution 4.0 International License. Inheritance in Contemporary America recent and related titles in gerontology Stuart H. Altman and David I. Shactman, eds. Policies for an Aging Society Robert H. Binstock, Leighton E. Cluff, and Otto von Mering, eds. The Future of Long-Term Care: Social and Policy Issues Leighton E. Cluff and Robert H. Binstock, eds. The Lost Art of Caring: A Challenge to Health Professionals, Families, Communities, and Society Tom Hickey, Marjorie A. Speers, and Thomas R. Prohaska, eds. Public Health and Aging Robert B. Hudson, ed. The New Politics of Old Age Policy Robert L. Kane, Reinhard Priester, and Annette M. Totten Meeting the Challenge of Chronic Illness Nancy Morrow-Howell, James Hinterlong, and Michael Sherraden, eds. Productive Aging: Concepts and Challenges Karl Pillemer, Phyllis Moen, Elaine Wethington, and Nina Glasgow, eds. Social Integration in the Second Half of Life Rachel A. Pruchno and Michael A. Smyer, eds. Challenges of an Aging Society: Ethical Dilemmas, Political Issues Joseph White False Alarm: Why the Greatest Threat to Social Security and Medicare Is the Campaign to ‘‘Save’’ Them robert h. binstock, consulting editor in gerontology Inheritance in Contemporary America The Social Dimensions of Giving across Generations jacqueline l. angel Professor, LBJ School of Public Affairs and Department of Sociology, The University of Texas at Austin The Johns Hopkins University Press Baltimore ∫ 2008 The Johns Hopkins University Press All rights reserved. Published 2008 Printed in the United States of America on acid-free paper 2 4 6 8 9 7 5 3 1 The Johns Hopkins University Press 2715 North Charles Street Baltimore, Maryland 21218-4363 www.press.jhu.edu Library of Congress Cataloging-in-Publication Data Angel, Jacqueline Lowe. Inheritance in contemporary America : the social dimensions of giving across generations / Jacqueline L. Angel. p. cm. Includes bibliographical references and index. isbn-13: 978-0-8018-8763-5 (hardcover : alk. paper) isbn-10: 0-8018-8763-1 (hardcover : alk. paper) 1. Inheritance and succession—United States. 2. Wealth—United States. 3. Inheritance and transfer tax—United States. 4. Estate planning—United States. 5. Older people—Family relationships—United States. 6. Older people—Care— United States. 7. Older people—Health and hygiene—United States. I. Title. hb715.a55 2008 306.3—dc22 2007027880 A catalog record for this book is available from the British Library. Special discounts are available for bulk purchases of this book. For more information, please contact Special Sales at 410-516-6936 or [email protected]. The Johns Hopkins University Press uses environmentally friendly book materials, including recycled text paper that is composed of at least 30 percent post-consumer waste, whenever possible. 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To my beloved husband, Ron, who has given me so much in my life and for whom I am enormously grateful This page intentionally left blank Contents Preface xi 1 The Story of Inheritance: Intergenerational Giving in Aging America 1 Trends in Wealth Transfers 4 The Aging American Family 4 2 The Inheritance Revolution 10 The Origins of Our Inheritance Laws 11 Early America 12 Forging a New Path: Women and Inheritance Laws 14 Inheritance in Modern America 16 Family and Inheritance Changes 19 Decisions about Inheritance 20 3 The Political Realities of Retirement Security 24 Who Is Going to Care for Us? 25 The Political Economy of Giving and Receiving 25 The Legacy of the Modern Welfare State 27 The Dilemma 29 Employer Pension versus Personal Savings 30 Cross-National Research 32 4 Dimensions of Giving between Generations 36 The Joy of Giving 37 Theoretical Perspectives on Money: Good versus Evil? 41 Contemporary Studies of Money 42 Gifts as Assistance 43 Contextualizing Gift Giving 47 Simply Love 48 Fellowship for Funds 48 viii contents Giving, Not Receiving 49 The Family Life Cycle and Inheritance 54 5 Money Memories: Narratives of the Meaning of Giving and Receiving 58 History Lessons 58 The Silent Generation 59 Baby Boomers 60 Expanding Obligations Equal Shrinking Inheritances 62 Drawing Down Assets 63 Deciding Too Late or Not at All 64 Family Disagreements 65 Background on the Interviews 65 Early Beginnings of Family Dynamics and Money 67 Money as a Gift 67 Money with Strings Attached 70 How Money Matters 71 The Costs of Wealth 73 A Guarded Secret 74 The Value of Gifts 75 6 Contemporary Values and Beliefs regarding Intergenerational Transfers 77 It Isn’t Just Money 77 Family Values and Ideologies 78 Leaving a Legacy 80 Transferring Assets 81 Inter Vivos Exchanges 82 Children Helping Parents 84 Choosing Inheritance 85 Challenges to Family Ideologies 86 To Give or Not to Give, That Is the Question 89 7 Leaving a Legacy: Personal Security, Family Obligations, and the State 92 The Effects of Public Policy on Family Gift Giving 93 How Estate Taxes Vary 94 Estate Taxes and Exemptions 95 Estate Planning for the Family 98 Private Long-term Care Insurance 101 Estate Recovery and Related Long-term Care Financing Issues 102 Inter Vivos Transfers and Inheritance 103 contents ix The Impact of Gift Giving on the Family: What Helps? What Hurts? 104 Myths and Realities of Making a Will 106 8 Inheritance and the Next Generation of Old-Age Policies 111 The New Status Quo 112 Sorting Out the Debate 114 Possible Scenarios 116 The Politics of Social Security Reform 119 The Face of the Future Workforce 122 Policy Options: Public, Private, and Combined 123 Health Care Insecurity 127 Implications and Conclusions 131 9 Summary and New Directions for Research 134 The Demography of Gift Giving in Late Life 136 Should Women Worry about Their Retirement? 137 Generational Differences: Money Memories and Family Ideology 140 An Agenda for Future Research 142 Appendix A. Methodology 147 Appendix B. Questions Used in Semistructured In-Depth Interview 150 Bibliography 151 Index 173 This page intentionally left blank Preface I became interested in contemporary inheritance practices while doing re- search for a book that looked at elderly people and their relationship to their families. In the course of that research, I made the startling discovery that the health of our aging population is inextricably linked to wealth. This fact presents new and important economic, legal, and emotional challenges for the American family. Surprisingly, the topic had largely gone unaddressed by policy makers for decades. Consequently, I have chosen to use a wide sociological lens to better understand the social dimensions and implications of intergenerational transfers, bequests, and inheritance in the United States. Chapter 1 describes how the transfer of wealth between generations is chang- ing in every regard, thus giving rise to a new social contract in which family will increasingly play a larger role in minimizing risks in later life. A background of U.S. inheritance laws and attitudes from colonial to modern times is given in Chapter 2, which describes some pivotal focal events that underlie inheritance practices today. Chapter 3 examines intergenerational exchanges and wealth transfers from a cross-national perspective. I compare and contrast the current institutional arrangements of pension programs in the United States with those in other industrialized nations, including Sweden, France, and Italy, that are also undergoing dramatic demographic change and challenges in caring for their elderly citizens. The comparison of the old-age welfare state in Europe and the United States helps to further place the topic in context and illuminate the goal of creating policies designed to influence individual-level wealth accumulation. In Chapter 4, I examine the massive differences among and within families regarding the extent of wealth and inter vivos transfers for college education, home mortgages, and other purposes. I summarize an abundance of statistical data based on nationwide household surveys of ethnically diverse families. The analyses shed light on the variation in gift giving and inheritance patterns across the life cycle. The focus of Chapter 4 is the generational differences between two xii preface cohorts, born from 1946 to 1964 (Baby Boom Generation) and those who grew up during the Depression era (Silent Generation). The lifelong shared experiences and events associated with each birth cohort have been found to influence atti- tudes toward retirement income security (Torres-Gil, 1992). I also look at gift- giving patterns for these different age groups across the economic spectrum, including people of non-Latino white, African American, Asian, and Mexican ancestry. In Chapter 5, I use both biographical narratives and anecdotal evidence to explore the role of material exchanges in defining the moral ties between genera- tions as they relate to gender, race, class, ethnicity, and religious affiliation. In so doing, I depart from traditional social scientific approaches to collecting data, relying instead on in-depth interviews of intergenerational transfers from the perspective of low-income families to upper-class men and women actively in- volved in faith-based organizations in Austin, Texas. The case study material reveals what is involved in the decision-making processes and helps to illustrate the generalizations drawn from the surveys. Chapter 6 fleshes out the concept of contemporary inheritance practices by thinking about how wealth practices have changed over time. The chapter draws on nonquantitative data about patterns of material exchanges and the symbolic aspects of the meaning attached to gift giving from the perspective both of the parent and the adult child.