Death and Taxes: Inheritance Tax Planning and Unexpected Mortali ty" with Jeanne Bomare and Ignacio Orueta
We use unexpected deaths during the first wave of the COVID-19 pandemic as a natural experiment to measure the extent of inherit ance tax planning in the United Kingdom. Because tax-planning strategies re quire time and foresight, the pandemic created an exogenous shock that limi ted opportunities to plan before death. Using administrative inheritance ta x returns linked to mortality data, we compare estates of decedents who die d unexpectedly during the pandemic with those who died in preceding years. We find that estates associated with unexpected deaths are significantly la rger and face higher tax liabilities, indicating that prior planning substa ntially reduces reported wealth at death. Our evidence suggests that inter- vivos transfers, rather than estate restructuring, are the primary mechanis m of tax planning. We estimate that inheritance tax planning reduces effect ive tax liabilities by approximately 50 percent, corresponding to £3-4.5 bi llion in forgone annual revenue. These findings highlight the importance of anticipatory wealth transfers in shaping inheritance-tax outcomes and carr y implications for the design of wealth tax policy.
DTSTAMP:20260409T015613Z DTSTART:20260226T130000Z DTEND:20260226T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR