Inheritance of assets, institutions or ideas lies at the nexus of a host of private and public concerns – both for those inheriting and those bequeathing – whether they be individuals, governments or societies. Given its mix of rationality and capriciousness, no wonder inheritance has provided such fertile ground for some of the world’s greatest literature. This issue of Global Investor examines the many aspects of inheritance, with contributions from an eminent panel of authors.

Great expectations: The economics of inheritance
Self-made wealth has diminished the importance of inheritance, but it still matters, writes Donald Cox, Professor of Economics at Boston College. Moreover, with the continued slowing of economic growth, some believe inheritance may reclaim its place as a major contributor to private wealth. Understanding these movements begins with an examination of why people make bequests. In a separate article, Jens Beckert, Director of the Max Planck Institute for the Study of Societies, considers the social implications of inheritance. The possibility of bequeathing and inheriting creates a “bridge” between past and future generations. But, inheritance can also propagate inequalities.

Benevolent influence: Some of the world’s greatest legacies have nothing to do with material wealth
From Aristotle to Martin Luther King Jr., thinkers around the world have changed the way we treat each other. A case in point is Henri Dunant, the founder of the International Red Cross, whose concept of medical neutrality within the inevitability of war proved an enduring model for doing good irrespective of national borders. An interview with Kishore Rao, Director of the UNESCO World Heritage Centre, answers the question of how to transfer outstanding cultural and natural heritage to the next generation.

Death, war and taxes: What determines how an inheritance is taxed?
Inheritance taxation is an old development, but adoption of inheritance taxes with high marginal rates is a fairly recent phenomenon. Political scientists Ken Scheve, of Yale University, and David Stasavage, of New York University, investigate the forces at work in the 20th century and conclude that the experience of mass warfare affects societal beliefs about fairness. These beliefs in turn shape opinions regarding inheritance taxation.

All in the family: Handling succession in family businesses
Stepping back from and passing on a business, whether to family members or an outside team, can be traumatic. However, it need not be. As the participants in Credit Suisse’s roundtable on succession planning for small and medium enterprises (SMEs) explain, foresight, mutual respect and good communication are essential to a successful handover. We also interview James Chen, Chairman of Wahum Group Holdings, on the special challenges of succession in Asian family businesses.

The great wealth shift: Emerging markets preserve their momentum
Wealth in emerging markets has been growing at an unprecedented pace. By 2025, the number of middle-class households in these regions could outstrip those in the United States. A Credit Suisse research analyst explains why emerging market SMEs – especially mid-sized, domestic companies – are the key segment to capture for wealth management and corporate banking, but also increasingly for succession planning purposes.

Real interest rates and higher returns on investment
The aging of a population changes the timing of inheritance and the forms it takes. In association with surging public debt, it is also likely to support the current trend toward low real interest rates for some time, along with rather mediocre equity returns. In such an environment, writes a Credit Suisse economist, higher returns on investment depend on reducing public sector debt. While getting there will be difficult politically, the combination of lowering debt, increasing government efficiency, and boosting private sector growth and income would be optimal.