Why did we do this research?

While most bequests are divided equally among children in the U.S., a non-trivial percentage (approximately 20%) are divided unequally. The purpose of this research was to determine whether certain personality traits of the parents are related to the decision to leave unequal bequests.

Why is this research important?

While bequests are a highly personal decision that incorporate many factors, treating children differently can have unintended consequences. First, children receiving lesser shares may assume this equates to less love and affection compared to their siblings. Second, children may compete with one another in the hopes of securing a larger share of the overall inheritance, creating family discord. Understanding the connection between personality traits and unequal bequests may help advisors have more meaningful and productive planning discussions with their clients.

What did we learn?

Using the University of Michigan’s Health and Retirement Survey (HRS), a sample of 1,229 U.S. adults aged 50 and older with more than one child was identified. The HRS assesses respondent personality using a five-factor model commonly referred to as OCEAN (openness, conscientiousness, extraversion, agreeableness, and neuroticism). Parents with higher levels of agreeableness and extraversion were more likely to leave unequal bequests, while parents with lower levels of conscientiousness were less likely to leave unequal bequests. This study controlled for parent assets and overall relationship quality with the children.

What are the takeaways for clients?

Based on our findings, highly agreeable clients who seek to avoid conflict may be susceptible to their children’s requests for a larger share of the family estate. Additionally, highly extraverted clients may only be considering the quality of their own relationship with their children and disregarding the relationship quality among the children when determining relative bequest amounts. Financial advisors should remind clients that leaving unequal bequests is not necessarily a bad or wrong decision, but rather one that may require additional planning and communication.

Source: Sommer, M., & Lim, H. (2022). The relationship between parents’ personality traits and leaving unequal bequests to children. Financial Planning Review, 5(1), 1-17.