Bequest Motive

The term bequest motive refers to the incentives behind the desire for a person or persons to pass along their assets when they pass away to heirs such as children or other family members. The bequest motive is important to understand in the context of annuities because certain types of annuities tie-up assets and prevent the contract owner from passing along or “bequeathing” those assets to their heirs.

John Bogle Urges Retirees to Ignore Bequest Motive

John Bogle thinks that the notion of leaving an inheritance is nice but certainly not essential. The Vanguard founder suggests that paying attention to one's personal finances and standard of living in retirement trumps the bequest motive since adult children should be able to take care of themselves: A lot of older people believe they should not spend their last dollar on the last day of their life. A lot of parents want to leave a nice little nest egg to their children. That's nice but not...
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Bequest Motive and Annuity Purchases

This discussion thread is a continuation of a frequently asked question that can be found here:

The question is as follows: "What happens if I die 5 years into a 9 year annuity? Can my heirs still receive the principal?"



What happens if I die 5 years into a 9 year annuity? Can my heirs still receive the principal?

The question basically deals with the issues of revocability and bequest motive--both of which are large issues when it comes to annuities.

The short answer is that there are many products and product options that effectively address revocability and bequest motives.

Hedging Regulatory and Tax Risk through a Roth IRA Conversion

Income limits on Roth IRA conversions are set to go away in 2010. This opens-up an opportunity for many to benefit from the tax advantages associated with the Roth IRA. Conversion may also make sense as a hedge against the distinct possibility of tax increases and higher tax brackets for future retirees. That said, the Roth IRA also happens to be an enormously efficient vehicle if there is a bequest motive or desire to pass assets to heirs: "if you want to leave a legacy to your heirs, a Roth...

An Interview with Retirement Planning Expert Henry Hebeler


Henry "Bud" Hebeler is a former Boeing executive who has been running a retirement planning...