Chapter 7: Inheritance
1 WHY INHERITANCE? Family links have economic implications even after the death of a member of the family because estates are normally transferred from one generation to another when a person dies. Inheritance is therefore of great economic importance not just because it allows for the transfer of the estate but also because it may determine the behaviour of the testator and heirs before the death of the former. Why do people accumulate a greater amount of assets than they can use while alive and leave them as inheritance to other people, usually their closest relations? There is a wide range of answers to this question.1 Some people find such accumulation satisfying in itself; others because it protects them against future risks. Let us take the case of a person who finds no satisfaction in setting aside capital nor has any interest whatsoever in transferring his fortune to others. Under ideal conditions in which this person knows with absolute certainty what his flow of income and date of death will be as well as the exact amount of any extra costs arising—illness, hospitalization and so on—he will gain maximum satisfaction from distributing his expenditure during his lifetime in the most convenient way and will leave zero assets, or less, at the time of his death. But, if he lives under conditions of uncertainty with no information on many of these aspects, he will prefer to have set aside some capital to which he can resort to if necessary...
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