Motives for Inter Vivos Transfers in Japan

Japanese parents’ motives for inter vivos gifts to their children are investigated in this paper. Firstly, the frequency of gift receipts is examined to obtain information in order to make conjectures about the motives. For instance, if respondents receive gifts annually, this provides reason to think that the motive is to reduce inheritance taxes; conversely, if respondents receive gifts only rarely, other motives are likely to be more important. Since the results of this paper indicate that gift receipts are not frequent, it seems that few parents make gifts on a regular basis to save inheritance tax. Finally, an estimation of the effects of life events and recipients’ characteristics on gift receipts and their amounts is given. The regression results suggest that the motive for gifts stems from a parental desire to ease children’s liquidity constraints, since respondents tend to have received gifts when they were young, and when there was a major life event involving large expenditures.