Studies have shown that intergenerational wealth transmission significantly affects wealth concentration and the growing wealth gap. Of the two million households that received an inheritance or a substantial inter vivos gift each year, roughly half are small, under $50,000, while transfers of $1 million or more account for only 2% of the transfers. Yet, those 2% of inheritances over $1 million comprise 40% of total wealth transferred. As scholars continue to examine the role of inheritance in the alarming wealth gap, few are focusing on how the laws of intestacy might exacerbate the gap by leading to greater wealth loss for the bottom half. In this study, I explore what happens to the family home, usually the largest single-value asset of those in the bottom 90%. The data, from 225 testate and intestate estates, are sobering, as the lower-value homes of the intestate decedents are significantly more likely to be sold at below fair market value or lost to foreclosure or tax sale. And if they aren’t, they are likely to be partitioned into smaller shares for recipients who seem less able to leverage their inheritances into building their own wealth. Through an analysis of the real property assets of these decedents, we can see in vivid detail how wealth is lost for some families and how it is gained for others.
Danaya C. Wright, What Happened to Grandma’s House: The Real Property Implications of Dying Intestate, 53 U.C. Davis L. Rev. 2603 (2020)