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Beyond the Buckets

Analysts estimate that $41 trillion of wealth will be passed on as the baby boomers begin to age and die over the next 50 years.1 Your share of that amount matters to your family and to the causes that you hold dear. No matter how much you have (or don’t have), your estate plan will help determine your family’s security beyond your death. Estate planning is not an easy topic to consider – both because of its complexity and because of the reality that each of us will die. However, considering these issues will be of tremendous value to your peace of mind and your family’s protection.

Should I always treat my children equally in regard to finances?
  • When it comes to wealth transfer and estate planning, you have to look at each of your children individually and assess them.

  • If you love your children equally, you will treat them uniquely. They have different needs, different personalities, and different circumstances. If you simply treat them equally financially, you are saying to them that they are not unique – dishonoring who they are.

  • Treat each of your children according to their individual circumstances. Some examples of different circumstances are a handicapped child or grandchild, or a child who is a single parent.

  • Communicate with your children. Make your decisions about wealth transfer and estate planning, and then be open with your children.

What should I know financially in regard to divorce, widowhood, and second marriage?

These are three very significant events in your life that can have significant financial consequences.

Four principles to follow:

  1. Take your time before making any important financial decisions. It is okay to wait even as long as a couple of years. Wait until you have your thinking reoriented.

  2. Seek good, Christian counsel. You need to get counsel from someone who understands the financial consequences of your situation as well as the psychological and emotional consequences.

  3. Seek support groups. These can be at your church or in other places, but it is important to have people around you who have been through the same thing you have.

  4. In the case of a second marriage, communicate. Make sure you communicate very thoroughly and openly. There are many complexities in this situation, and the more you can communicate, the easier the transition will be.

What are the three most important questions to ask myself about estate planning and wealth transfer?

As you plan, be sure to give yourself enough time. To do your planning properly can be a time consuming process.

  1. If we transfer X amount of dollars to X child, what is the worst thing that could happen? This differs for each child and their spouse. An important thing to remember is that you should not overstep the husband’s need to provide for his family.

  2. Having defined the worst thing, how serious is it? In some cases, the worst thing is very serious, and in some cases it is rather mild.

  3. What is the probability of the worst thing happening? If the consequences are serious and the probability is high that the worst thing will occur, then be very careful how much wealth you transfer to that family unit.

Why are wealth transfer decisions so difficult?

There are five main distinctions between wealth transfer and estate planning:

Wealth Transfer:

  1. With wealth transfer, the impact on the beneficiary is the most important thing.

  2. It can and should begin now.

  3. Wealth transfer is stewardship driven. God gave you this money, so as a good steward, you need to figure out who is the best next steward.

  4. It wants to honor God. God owns it all, so ask Him how you can best honor Him with what you have now.

  5. Wealth transfer transfers ownership now.

Estate Planning

  1. In estate planning, the impact on the estate and the donor are the highest priority.

  2. Estate plan usually goes into effect at death.

  3. It is tax efficiency driven. It asks the question “How can I minimize estate taxes and pass the most on?”

  4. Estate planning honors self. Many times, estate planning asks the question “How can I get the most honor after my death?”

  5. Estate planning retains ownership and control until after death.

What are the ways in which I can plan to leave my estate?

If you simplify your thinking you can simplify your life and your decision- making.

There are only three places your estate can go after you die.

  1. Charity: If you leave your entire estate to charity there will be no taxes, but your heirs will not get anything.

  2. Heirs: There is usually a tax consequence and a legal expense associated with this, so your heirs will not get dollar for dollar what you leave them.

  3. Legal expenses and taxes

You can decide now, through estate planning, where your estate will go, or someone else will decide for you after you are gone.

What are the six steps of estate planning and wealth transfer?

There are six legitimate and logical steps that should be followed in sequence as you do your estate plan.

  1. Decide the beneficiary: This should be decided before you decide how much each beneficiary will get.

  2. Determine the amount

  3. Determine the timeline: Will you begin wealth transfer before your death, or after?

  4. Transfer title: Will you transfer title to your assets with no strings attached?

  5. Tools and techniques: This step is mainly focused on the tax efficiency of your estate plan. Most estate planning begins here and backs into the answer to the previous steps.

  6. Talk: Communicate to your beneficiaries what you will be doing and why. You do not need to tell them any amounts, but it is important to talk to your heirs so that there will be less misunderstanding after you are gone.

Your estate does not have to be big for you to have to determine where it goes. Talk to your heirs about the stuff you have (heirlooms, pictures, jewelry, etc.) and who will get it.

It is much better to decide and communicate unemotionally now than to wait until you are gone when there could be misunderstanding and wrong expectations.

Why are wealth transfer decisions so difficult?

There is a lot of potential for misunderstanding as you transfer wealth. The problems that arise in families are usually not about money; rather, they are usually about things.

When it comes to wealth transfer and estate planning decisions, there are many issues that create complexity and difficulty.

  1. How can you help your heirs without harming them?

  2. Will you create sibling rivalry with your decisions?

  3. How do you manage the expectations of your heirs?

  4. How do you provide for your spouse?

  5. How do you provide for the Kingdom?

  6. If you have a business, how do you provide for the succession of the business?

  7. How do you make sure that you finish strong?

  8. What are the legal and tax complexities?

  9. What is your timing? (No one knows when he or she is going to die.)

These are just a few of the issues that make wealth transfer and estate planning decisions difficult. You will need to look at other resources to find the answers to all of these questions. But there are answers available.

Wealth transfer should begin now, not as you get close to death.

What do I need to know about mortgage insurance and credit life insurance?
  • This is insurance that credit card companies and mortgage companies offer “really cheap” that will pay off your credit cards or mortgage in the event of your death.

  • It is usually 20 to 50 times more expensive to purchase these types of insurance than it is to buy a straight term life insurance policy.

  • You do need life insurance to cover the debts that you have. But it is much better to buy your own insurance and assign your benefits to the lender or creditor.

In regard to insurance, should I buy term or whole life?
  • The first and most important question you should ask yourself is how much life insurance do you need? Generally, the younger you are, the more life insurance you will need, so that your can provide for your family, pay for children’s education, pay off your home mortgage, etc.

  • The second question you should ask yourself is how much life insurance can you afford? Once you decide this, you can decide what mix of term and whole life insurance you should get. Work to find a good insurance agent who can help you make this decision.

  • The most important counsel I could give you is to never be uninsured or underinsured.

Is life insurance scriptural?
  • Doesn’t scripture say that God will provide? Yes it does, and He will. One way He may provide for your family is through your life insurance.

  • I Tim. 5:8 says, “If anyone does not provide for his relatives, especially for his immediate family, he has denied the faith and is worse than an unbeliever.” (NIV) It is a poor stewardship decision to be underinsured or uninsured.

Leaving Money to Irresponsible Children

If you love your children equally, you will treat them uniquely.

3 questions:

  1. If I leave money to a certain child, what is the worst thing that could happen?

  2. How serious is the worst thing that could happen?

  3. How likely is the worst thing that could happen to occur?

If you have an irresponsible child, the difficult decision is whether or not to leave God’s resources to that child. Your thinking will change when you begin to think of your money as God’s money. Then, the issue of estate planning becomes a stewardship issue.

There are a couple of different things you can do if you have an irresponsible child:

  1. Do not leave any money to that child. This is a very significant decision, and I do not usually recommend that you do this.

  2. Set up a trust managed by someone else. This can be a sibling or someone outside the family.

  3. Pray for supernatural wisdom. God will speak to your heart if you let Him.

Luke 16:11-12 (NIV)
“So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else’s property, who will give you property of your own?”

Colossians 3:23-24 (ESV)
“Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ.”

Focus on the Family, “The Legacy You Want to Give”

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Defining Wealth Transfer

Estate planning:

Estate planning is all about the tax consequences of your estate.
Estate planning tries to minimize the taxes you will pay and maximize the amount you will distribute to your heirs.

Wealth transfer:

Wealth transfer can begin right now, while you are alive.
Remember to be intentional as you plan your wealth transfer.
Wealth transfer will include an estate plan, but goes far beyond an estate plan.

Job 1:21 (NIV)
“Naked I came from my mother’s womb, and naked I will depart. The Lord gave and the Lord has taken away; may the name of the Lord be praised.”

Psalm 39:6 (NIV)
“Man is a mere phantom as he goes to and fro: He bustles about, but only in vain; he heaps up wealth, not knowing who will get it.”

Proverbs 15:16 (NIV)
“Better a little with the fear of the Lord than great wealth with turmoil.”

Ron Blue and Jeremy White, “Living as God’s Steward”

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The Responsibility of Wealth Transfer
  • As you make your wealth transfer plans, think about what your heirs will know about where your wealth came from, and where you came from.

  • Do you know the maiden names of any of your great-grandmothers? Will your great-grandchildren know your maiden name?

  • Knowing the maiden name of your great-grandmother is a small detail, but it may be indicative of what your heirs know about your story. Passing on wealth to several generations is not wrong, but with that wealth, also pass down your values and your story.

II Timothy 3:15 (ESV)
“And how from childhood you have been acquainted with the sacred writings, which are able to make you wise for salvation through faith in Christ Jesus.”

Romans 15:4 (ESV)
“For whatever was written in former days was written for our instruction, that through endurance and through the encouragement of the Scriptures we might have hope.”

Judges 2:10 (ESV)
“And all that generation also were gathered to their fathers. And there arose another generation after them who did not know the Lord or the work that He had done for Israel.”

MSN, “The Curse of Vanishing Wealth”

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Deciding Beneficiaries (The transfer decision)

There are three choices for where you can leave your estate:

  1. To heirs

  2. To charity

  3. To the government

As you think about where to leave your wealth, there are three principles to follow:

  1. The treasure principle: Where is your treasure? That is where your heart will be. Do you want to leave your money here, or do you want to send it on ahead, by giving it to charity? More

  2. The unity principle: Are you in agreement with your spouse about where you are leaving your money? A unified decision about where to leave your money is usually the best decision. More

  3. The wisdom principle: Are you leaving wisdom to your heirs? If you are not going to leave wisdom to your heirs, do not leave them wealth. Wisdom comes from life experiences, so be careful not to shield your heirs from life experiences by leaving too much money too early in their lifetime. More

Matthew 6:19-24 (NIV)
“Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there will your heart be also. The eye is the lamp of the body. If your eyes are good, your whole body will be full of light. But if your eyes are bad, your whole body will be full of darkness. If then the light within you is darkness, how great is that darkness! No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to one and despise the other. You cannot serve both God and Money.”

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How Much to Each Beneficiary (The treatment decision)
  • If you love your children equally, you will treat them uniquely.

  • Your children are not all the same, and as time goes on and they get older, they become more and more unique.

  • Consider your wealth transfer decision carefully. Think about each of your children individually, and consider what would be best for them and their families.

  • Viewing your children as unique individuals does not mean that you will not leave them wealth equally, but make your decision with careful consideration.

Proverbs 22:6 (ESV)
“Train up a child in the way he should go; even when he is old he will not depart from it.”

Ron Blue, “Splitting Heirs”

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When to begin the wealth transfer process? (The Timing Decision)

There are two principles you should be thinking about related to the timing of your wealth transfer:

  1. Put your money into the Kingdom as early as you are able. The sooner you give your money to Kingdom work, the sooner it can be put to use for God.

  2. Do your giving while you’re living, so you know where the money is going. If you do this, you can see how the person or organization handles the money you give them.

Luke 12:33 (ESV)
“Sell your possessions, and give to the needy. Provide yourself with moneybags that do not grow old, with a treasure in the heavens that does not fail, where no thief approaches and no moth destroys.”

Crown Financial Ministries has an article about teaching your adult children good stewardship.

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How to transfer ownership of family property or family business? (The Title Decision)
  • When you begin to give away your wealth, you need to really give it away – with no strings attached. Remember that God owns it all. You get to use it, but it is all His.

  • When you transfer the title, you need to transfer control.

  • One of the most difficult things to give up control over when you transfer title is the family business. If you do not literally transfer the title, you will be tempted to retain control over it.

  • Just remember that everything you have belongs to God and comes from God, and seek His wisdom about transferring it to your heirs – and then step out in faith.

Psalm 24:1-2 (NIV)
The earth is the Lord’s, and everything in it, the world, and all who live in it; for He founded it upon the seas and established it upon the waters.

Gordon MacDonald discusses building a core of character into children in, “A Blessed Inheritance.”

Click Here to View the Full MasterYourMoney.com Blog

How to decide which tools to use in estate planning? (The Tools and Techniques Decision)

There are three principles to be aware of as you look at estate planning tools:

  1. The tools principle: The tools (wills, trusts, etc.) are to accomplish your goals and purpose – they are not the purpose in themselves.

  2. The keep it simple principle: Wealth transfer can be very complex. The simpler you keep your tools, the easier it will be for your estate to be used for the purpose you intended.

  3. The trust principle: If you cannot trust the ultimate beneficiary of your estate, do not leave them wealth. Do not try to control wealth from beyond the grave.

I Corinthians 14:33a (ESV)
“For God is not a God of confusion but of peace.”

Brian O’Connell lists “Estate Planning Dos and Don’ts”.

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How to communicate with family about wealth transfer plans? (The Talk Decision)

One of the most important decisions you need to make as you transfer wealth is how to manage your heirs’ expectations. It is important to create realistic expectations in your heirs.
A coping gap is the difference between expectations and reality.

One way to create proper expectations is to have a family conference. If you have a family conference, you can let your heirs know what to expect. This does not have to be formal – it can be around the dinner table or on a family vacation. Let your heirs know what to expect after your death. You want to be the one to explain your estate, instead of leaving this to your lawyers. You do not want the explanation to come to your heirs after you are gone.

Colossians 3:21 (ESV)
“Fathers, do not provoke your children, lest they become discouraged.”
Kate Redden, of the National Planning Group of Ronald Blue & Co. writes about communicating your estate plan with heirs.

Click Here to View the Full MasterYourMoney.com Blog

How can I be sure that money is given according to my intentions?

If you defer your charitable giving until after death:

  • Create flexibility in your estate plan. Things change. Ministries may change significantly. Do not tie the hands of the people who will be in charge of your estate.

  • Consider giving your gift now, so you know where the money is going.

II Corinthians 9:6-7 (NIV)
“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”

National Christian Foundation at has stories of families who have used donor advised funds to do giving now.

Click Here to View the Full MasterYourMoney.com Blog


Beyond the Buckets

Analysts estimate that $41 trillion of wealth will be passed on as the baby boomers begin to age and die over the next 50 years.1 Your share of that amount matters to your family and to the causes that you hold dear. No matter how much you have (or don’t have), your estate plan will help determine your family’s security beyond your death. Estate planning is not an easy topic to consider – both because of its complexity and because of the reality that each of us will die. However, considering these issues will be of tremendous value to your peace of mind and your family’s protection.

 


Beyond the Buckets – Estate Planning

Analysts estimate that $41 trillion of wealth will be passed on as the baby boomers begin to age and die over the next 50 years.1 Your share of that amount matters to your family and to the causes that you hold dear. No matter how much you have (or don’t have), your estate plan will help determine your family’s security beyond your death. Estate planning is not an easy topic to consider – both because of its complexity and because of the reality that each of us will die. However, considering these issues will be of tremendous value to your peace of mind and your family’s protection.

Deuteronomy 6:6-9
And these words, which I am commanding you today, shall be on your heart; and you shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up. And you shall bind them as a sign on your hand and they shall be as frontals on your forehead. And you shall write them on the doorposts of your house and on your gates. (NASB)

Job 1:21
He said, “Naked I came from my mother’s womb, and naked I shall return there. The Lord gave and the Lord has taken away. Blessed be the name of the Lord.” (NASB)

Psalm 24:1
The earth is the Lord’s, and all it contains, the world, and those who dwell in it. (NASB)

Psalm 37:25
I have been young, and now I am old; yet I have not seen the righteous forsaken, or his descendants begging bread. (NASB)

Psalm 49:17-20
For when he dies he will carry nothing away; his glory will not descend after him.
Though while he lives he congratulates himself – and though men praise you when you do well for yourself –
He shall go to the generation of his fathers; they shall never see the light.
Man in his pomp, yet without understanding, is like the beasts that perish. (NASB)

Proverbs 3:5-6
Trust in the Lord with all you heart and do not lean on your own understanding. In all your ways acknowledge Him, and He will make your paths straight. (NASB)

Proverbs 13:22
A good man leaves and inheritance to his children’s children, and the wealth of the sinner is stored up for the righteous. (NASB)

Proverbs 20:21
An inheritance gained hurriedly at the beginning will not be blessed in the end. (NASB)

Proverbs 21:20
In the house of the wise are stores of choice food and oil, but a foolish man devours all he has. (NIV)

Proverbs 22:6
Train up a child in the way he should go, even when he is old he will not depart from it. (NASB)

Proverbs 27:23-24
Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations. (NIV)

Proverbs 29:17
Correct your son, and he will give you comfort; he will also delight your soul. (NASB)

Ecclesiastes 7:11-12
Wisdom along with an inheritance is good and an advantage to those who see the sun. For wisdom is protection just as money is protection. But the advantage of knowledge is that wisdom preserves the lives of its possessors. (NASB)

Matthew 6:19-24
“Do not lay up for yourselves treasures upon earth, where moth and rust destroy, and where thieves break in and steal. But lay up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there will your heart be also. The lamp of the body is the eye; if therefore your eye is clear, your whole body will be full of light. But if your eye is bad, your whole body will be full of darkness. If therefore the light that is in you is darkness, how great is the darkness! No one can serve two masters; for either he will hate the one and love the other, or he will hold to one and despise the other. You cannot serve God and mammon.” (NASB)

Matthew 7:11
“If you, then, being evil, know how to give good gifts to your children, how much more shall your Father who is in heaven give what is good to those who ask Him.” (NASB)

Luke 12:48b
From everyone who has been given much, much will be required; and to whom they entrusted much, of him they will ask all the more. (NASB)

Romans 8:17a
and if children, heirs also, heirs of God, and fellow heirs with Christ (NASB)

I Timothy 5:8
But if anyone does not provide for his own, and especially for those of his household, he has denied the faith, and is worse than an unbeliever. (NASB)

II Timothy 3:16-17
All scripture is inspired by God and profitable for teaching, for reproof, for correction, for training in righteousness; that the man of God may be adequate, equipped for every good work. (NASB)

James 1:5
But if any of you lacks wisdom, let him ask of God, who gives to all men generously and without reproach, and it will be given to him. (NASB)

I Peter 1:3-5
Blessed be the God and Father of our Lord Jesus Christ, who according to His great mercy has caused us to be born again to a living hope through the resurrection of Jesus Christ from the dead, to obtain an inheritance which is imperishable and undefiled and will not fade away, reserved in heaven for you, who are protected by the power of God through faith for a salvation ready to be revealed in the last time. (NASB)



 

 
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