Wealth transfer receipt and later life wealth

Wealth ownership is highly concentrated in the U.S. and this inequality may be reproduced in subsequent generations through wealth transfers. Yet we do not know how households respond to the receipt of a wealth transfer and whether time amplifies the initial benefit of a wealth transfer. Using the Survey of Consumer Finances, we test whether wealth transfer recipients gain an advantage that cumulates with time. We find that the positive association between transfer amount and present net worth weakens as time elapsed since transfer receipt increases. The larger the wealth transfer, the more its association with net worth is diminished by time since transfer receipt. Though wealth transfers provide recipients with a significant initial advantage, households appear to adapt to wealth transfer receipt by some combination of reduced savings and increased consumption. We demonstrate an association between receiving a larger wealth transfer and one type of increased consumption, gift-giving.