A Classic Public/Private Clash

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My mom passed away recently, and we’re planning a memorial service in her home city, where none of us three offspring lives.  There are lots of expenses:  the service; food afterwards; planes and hotels for all of the children, grandchildren and any great-grandchildren who can come.

Financing this event illustrates general issues in the division between the public and private sectors.  I view Mom’s estate as the equivalent of the public sector (since all offspring share equally).  So my idea is to have the estate pay for the public good — the service — and also the food, etc. at the service. Each participant is responsible for his/her own travel, hotel, etc. — private financing  My wife pointed out that some of the siblings can’t afford the travel/hotel as well as others can, and could be subsidized by the “public sector.” I responded that we shouldn’t create incentives to travel or stay lavishly, nor to have huge numbers of relatives paid to attend.  A classic public-private, equity-efficiency clash.


John F

I'm sorry for your loss, but damn man, that's cold.

dd

Maybe what your mom would've wanted is more important than an equity-efficiency clash? Or perhaps allowing siblings to attend their mother's funeral is more important than having "too many" people's attendence funded? You'd be an awfully strange sibling to have.

mike

Condolences, Daniel.

Ben D

Perhaps a percentage match, rather than a flat subsidy? That might provide some relief to those in need without distorting incentives.

CK

Ala the Earned Income Credit?

Quinton

No economic comment but I'm sorry about your Mom and hope the service goes well

jonathan

I disagree with your categorizing: the entire event is a public good. Attendance, meaning travel and stay, is part of the public event. You can handle subsidy issues by paying to a minimum - like by noting a couple of hotel choices - and say the estate will pay for that level and anything beyond is up to you. Air fare is less controllable but you can obviously exclude 1st class, etc. and maybe require non-refundable tickets. I'd say that better moves the private part to the private participants and yet allows for the public good.

jonathan

And I meant to say, sorry about your mother.

Lindsay

I was 12 when my father died. I lived across the country, and no one helped my mom get me a ticket out there for the funeral even though I was close to all of them, and they had plenty money to help. So his only child wasn't even at his funeral. I never forgave his side of the family. I wasn't rich enough to mourn my father. Horrible priorities.

Wes

Perhaps offer to everyone that the estate will cover basic hotel (Best Western or the like) and provide a reasonable per diem for food outside of the event. If anyone wants more or better services, that's where the private funding comes into play.
Getting to the town is more challenging, because of the variety of starting locations and associated travel costs.

Colin

This strikes me as a stretch. My grandfather passed away the other week and the estate picked up the cost of my expenses to travel to TX, but that didn't mean I spent lavishly. I checked around for the cheapest hotel I could find -- actually canceling one reservation after I found a cheaper one -- and also rearranged my schedule from a Friday-Sunday visit to Friday-Monday so I could save several hundred dollars on the airfare. As long as your relatives aren't jerks they should do the same regardless of whether they are paying. It's simple respect.

William

Too bad she didn't have a life insurance policy to cover all of the final expenses that would include a funeral, burial, airfare and a hotel for the family. That would would make these conversations obsolete.

Kevin Hansen

How about you pay a 'tax' and subsidize the cost of the travel so your family can grieve the loss?

Mike B

The estate should pay for everything because otherwise it would just get eaten up by estate taxes. Shifting the funeral expenses onto the estate is a good way to get more wealth to the heirs.

bob

First, I'm also sorry for the loss.

Second, the estate tax is only on estates larger than 5 million dollars. Do you really believe that people who are about to inherit millions are worried about $500 or less in hotel costs? There are typically only 15,000 or so families who pay estate tax each year.

I hope that Daniel is one of them and his mother enjoyed comfort and luxury during her life.

VB in NV

The estate could pay for each sibling's travel and lodging---if a sibble wants spouses or children to attend, that is his/her responsibility (as are all meals).

Jen

I think it depends on whether any of the relatives really can't afford to travel to the service. If there are any who truly can't afford the airfare and a basic hotel room for a couple of days, then I think it makes sense for the estate to pay some of those expenses (but as others have said, dictate the hotel choice, or offer a choice of two reasonably priced options). But if everyone has enough discretionary income to afford the trip and it's just that some have more extra than others, then let everyone pay for themselves. It would be a shame for some not to be able to be there due solely to financial concerns when there are others who could afford to help out their relatives.

I'm sorry for the loss of your mother.

Doc

WILLIAM--The policy would not pay this quickly.
MIKE B.--The first $3.5 is free of estate taxes and if her estate exceeds that amount then these costs are peanuts.

Brad

I'm sorry for your loss.

This is obviously not solely an economic issue but it is interesting to look at from that perspective.

Subsidy discentives may actually be less than the associated costs of subsidizing travel and expense. Inablility to find closure and subsequent therapy expenses, probate litiigation expenses resulting from ill will generated by not subsidizing and prospective ongoing family disputes (difficult to quantify associated costs) are all prospective costs to be considered. The source of funding for each is variable and complicates analysis. From an efficiency perspective it may well be worth subsidizing travel and expense to a modest degree if your analysis of the personalities involved indicates that this will mitigate sufficient risk and associated expense.

Mike B's comments regarding estate taxes are valid only if the estate exceeds the exempt amount. If that is the case, he is right on.

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Mango Punch

I'm sorry for your loss.

I think you're missing a more fundamental issue on the "Public/Private Clash". The memorial service essentially redistributes wealth from those who cannot travel easily to those who can. In the most extreme case, if a sibling cannot afford to travel they miss out on the portion of the estate that they would get that is now being used on the memorial service. Even for those who can afford to travel but for which it uses more of their disposable wealth, the money they spend on travelling and on the service is disproporte (in terms of the trade off they make with other goods and hence we assume utility).

We can take this one step further and view the funeral expenses as public expenditure (assuming your mother didn't set aside a set amount of $ in her estate for the expense). Different inheritors will undoubtably have different values they assign to the various services offered (castket, flowers, grave marker etc.) and undoubtably some level of inefficiency will exist (even in the absence of "personal" expenditure on travel lodging etc.).

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