Land and dwellings are among the most common forms of assets passed on as inheritances, according to the Central Bank.
The details are revealed in an economic letter published by the Central Bank entitled ‘The long and short of it: Inheritance and wealth in Ireland’.
It states that inheritances matter for wealth accumulation, and are often central to policy debates on wealth taxes.
Inheritances
The letter shows that up to 2020, over one-third of households in Ireland had received inherited wealth, the cumulated value of which (€97 billion) accounts for around one sixth of current net wealth for these households.
But the impact is potentially wider than the direct value of the inheritance itself; inheritors are typically much wealthier and own more property, according to the Central Bank.
Nevertheless, inherited wealth represents a larger share of total net wealth for households in the middle of the wealth distribution, than for the wealthiest households, the bank stated.
As a result, the analysis shows that inheritances in Ireland contribute little to wealth inequality, and may even have reduced it over time, similar to findings for Britain and the US.
Money was the most common type of asset received (57%) by households who reported ever having received an inheritance (Figure 2 below).
Dwellings (33%) and land (19%) were the other most common asset types reported by households in the 2020 survey.
Figure 3 (above) shows the proportion of the total value of all inheritances accounted for by each type of inheritance. Land and dwellings represent about 70% of the cumulative value of all inheritances received by households by 2020.
Dwellings and land represented the largest value in total inheritance up to the 1980s. Thereafter, money became a consistent part of the value of transfer wealth, according to the Central Bank document.
This decomposition reflects the changes that the Irish economy, and thus Irish households, have experienced over time, it said.
The vast majority of disposers were parents of the beneficiary. Parents account for 78% of the total value of all inheritances and gifts as of 2020.