Inherited wealth in Ireland increases to €97bn

Central Bank analysis finds that inheritances may have reduced overall wealth inequality over time

For those who received an inheritance, money was the most common type of asset received, while more than a third received dwellings.

The number of Irish households receiving inheritance or gifts from previous generations is growing, new analysis from the Central Bank of Ireland shows.

Up to 2020, more than a third of households in Ireland had received inherited wealth totalling €97bn, which accounts for approximately one sixth of the current net wealth for these households.

The analysis also found that those who have received an inheritance are typically much wealthier and own more property

The role of intergenerational wealth transfers through inheritances and gifts has been debated for some time in relation to how it impacts wealth inequality. International studies have shown that such wealth transfers can account for up to a third of current net wealth in some countries.

Using self-reported data on inheritances from the Household Finance and Consumption Survey (HFCS), the Central Bank analysis found the incidence of inheritances appears to be increasing over time, with a higher proportion of households receiving inheritances in the last 20 years than previously. 

In 2020, those whose head of household was aged 60 or over were more likely to have received inheritances than similar households in 2013.

However, the study found that the value of inherited wealth is a larger share of total wealth for those in the middle of the wealth distribution than for those at the top. As a result, they said inheritances in Ireland do not appear to contribute to wealth inequality, and may even reduce wealth inequality, which is similar to findings in Britain, the US, and Germany

Money, dwellings, and land

Of those who received an inheritance, money (57%) was the most common type of asset received. More than a third received dwellings, followed by land at 19%. Parents accounted for 78% of the total value of all inheritances and gifts as of 2020.

Dwellings and land represented the largest value in total inheritance up to the 1980s. Thereafter, money became a consistent part of the value of transfer wealth. The study notes that this reflects the changes that the Irish economy, and households, have experienced over time.

Inheritors are also more likely to own a home or private business, relative to those without inherited wealth. On average, inheritors’ net wealth is 155% higher than those that have not inherited.

"We find that inheritances may actually have reduced overall wealth inequality over time, as their contribution to net wealth is higher for households in the middle of the wealth distribution than for households at the top," the report concludes.