Most Wealthy Individuals Don’t Make Bequests, Study Finds

Most Wealthy Individuals Don’t Make Bequests, Study Finds

While nearly all wealthy individuals make charitable contributions during their lifetimes, most fail to do so at the time of death, a report from the Urban Institute finds.

Based on estate and income tax returns, the report, Patterns of Giving by the Wealthy (19 pages, PDF), analyzed charitable giving by wealthy individuals at the time of their death in 2007 compared with the last five years of life (2002-06). The study found that when charitable contributions were made by the estates of wealthy individuals after death, the contributions on average were much larger than what the individuals gave over the last five years of their life, even though such giving would almost always have reduced their total tax burden. Indeed, those who gave at death contributed so much at that point that, in aggregate, it significantly exceeded their total late-in-life giving.

According to the report, the share of wealthy individuals who did not report any giving (including those who did not itemize and are presumed to have given less than the standard deduction) in 2002-06 ranged between 5 percent among those with a net estate value of at least $100 million to about 30 percent among those with a net estate value of between $2 million and $5 million. The study also found that the share of estate tax returns with zero charitable bequests in 2007 ranged between 61 percent and 97 percent among married decedents and between 28 percent and 89 percent among single decedents.

While there was a correlation between giving a greater share of income in 2002-06 and giving a greater share of estate in 2007, the study found an association between a higher average estate size and a higher rate of giving out of the estate only among those who gave more than 20 percent of their estate. At the same time, many among those who gave a large share of their income to charity left nothing to charity in their estates — including 49 percent of those who gave at least 20 percent of their income to charity, 70 percent of those who gave between 10 percent and 20 percent, and 75 percent of those who gave between 5 percent and 10 percent.

The report suggests that the reasons most people who give — and sometimes give generously — fail to dedicate anything to charity in their wills include concerns about the cost of long-term health care, low rates of realization of income, satisfaction from managing their wealth, limited engagement with estate planning, and limited attention to the opportunities that wealth provides during life as well as through transfers at death.

"Can societal expectations be changed to make giving out of wealth both during life and at death more normal?" the report's authors ask, before calling for more focused efforts to engage the wealthy in increasing their charitable giving by helping them better visualize the legacy opportunities made possible by their wealth.

"Patterns of Giving by the Wealthy." Urban Institute Report 09/19/2018.