Inheritance Payments Show Money Trail

Advisers who want to see where the money is can check out an interactive inheritance map from SmartAssets that ranks counties nationally and by state—and some of the results may be surprising.

SmartAsset looked at data on wealth transfers made during estate settlements and life insurance payouts to find the counties with the largest annual inheritance payments. The point was to see how large a role inheritance plays in local economies in the United States. 

To calculate county-level wealth transfers, SmartAsset took the product of each county’s average household wealth and the annual number of deaths among wealth-holding individuals (those age 25 or older). To determine total life-insurance payouts, the firm looked at life insurance coverage rates and statewide insurance payouts—counties with higher coverage rates were assigned a higher proportion of each state’s total insurance payout.

Finally, from the total of wealth transfers and insurance payouts, researchers subtracted total estate taxes paid at the county level, based on state-level estate tax payments and per capita wealth in each county.

“I think some people will be surprised by the numbers,” says AJ Smith, managing editor at SmartAsset, which uses proprietary software and data to provide clear answers to complex financial questions.

“We took account of estate taxes,” Smith tells PLANADVISER, “otherwise, the numbers would look bigger but they wouldn’t really give an accurate picture.” Factoring in the taxes paid by the estate diminishes overall inheritance figures, but makes the calculation a clearer picture of the amount of an inheritance.

A state’s low tax rate can substantially alter the size of an inheritance. New Castle, Delaware, managed to take the fourth spot on the list even though it had the smallest amount of net worth transferred, at $180,669,246. A relatively modest $19 million bill for estate taxes left it with a hefty $3 billion in payout.

The county with the largest payouts (including life insurance payouts and inheritance settlements) is, not too surprising, Los Angeles, with $779,213,949 in assets transferred and $8,674,889,027 in life insurance distributed. Estate taxes totaled $429,642,656. Total payout: a cool $9 billion, showing quite a gap from the 10^th place on the list, held by Nassau County, New York, at $3 billion.

By state ranking, Nassau is the top county in New York State for inheritance, followed by Suffolk ($3,017,575,145) and Kings ($2,886,935,898). New York City holds sixth place, with a mere $1,906,698,312.

The top ten counties are:

1. Los Angeles $9,024,460,320
2. Cook, Illinois $6,757,095,464
3. Hartford, Connecticut $4,004,088,190
4. New Castle, Delaware $3,981,728,923
5. New Haven, Connecticut $3,859,735,056
6. Maricopa, Arizona $3,796,626,029
7. Fairfield, Connecticut $3,530,425,138
8. San Diego, California $3,202,546,585
9. Orange, California $3,123,002,362
10. Nassau, New York $3,074,973,245