CHRISTIAN ESTATE PLANNING BASICS
By: Laurie Valentine- COO & Trust Counsel
Estate planning is an important part of every Christian’s stewardship responsibilities. A Christian estate plan is one that you develop by determining God’s will for (1) how your assets should be distributed at your death and (2) how your affairs would be managed in the event you become incapacitated during your lifetime.
As you begin these lessons, take a moment to ask for God’s guidance as you study the basics of Christian estate planning.
WEEK 1 PLANNING FOR ASSET DISTRIBUTION AT YOUR DEATH
Scripture References: Proverbs 3:9; Matthew 6:33; 1 Timothy 5:8.
Please read these passages in your Bible now.
How do I get started in accomplishing God’s purposes for distribution of what I own at death?
To accomplish God’s purposes for how your assets will pass at death requires a written plan of distribution—a Will—and coordination of the plan of distribution set out in your Will with how your assets are titled and how life insurance, IRA, retirement and other contractual death benefit beneficiaries are designated.
How do I make a Will?
Making a Will is not a difficult thing to do. Here’s how to do it in ten easy steps:
- Determine the value of your estate. List all of your assets in one column. Assets are what you own—your real estate, investments, bank accounts, business interests, life insurance, retirement plan benefits and IRA’s, and your personal property. List all of your current liabilities in another column. Liabilities are what you owe—mortgage(s), credit card and other debts. Add each column. Subtract the total liabilities from total asset value; the difference is your net worth.
- Plan for each family member. You have a responsibility to take care of your family, especially your spouse and children. Include a provision for each person you want to benefit; don’t leave it all to one assuming they will “do the right thing” and share it with the rest of the family.
- Consider Charitable causes. Consider at least tithing your estate through the inclusion of a bequest to your church and other Christian causes. The bequest(s) can be outright or can be used to create an endowment fund from which only the earnings are distributed to the charitable cause(s) named as beneficiaries.
- Decide whom you want to name as executor/executrix. This should be someone who is both competent and familiar with your family and capable of dealing with the assets that will be in your estate.
- Decide whom you want to name as guardian for minor children. This person or couple will be given custody of your children if both parents die before all children are 18 years old.
- Provide for common disaster. Provide for an alternate plan of estate distribution should something happen to your entire family.
- Choose an attorney to prepare your Will. Use an attorney whose practice includes estate planning and probate work.
- Keep your Will in a safe place. The signed original copy should be kept in your safe deposit box, a fireproof lock-box or by your estate planning attorney. Make sure that your executor has access to the place where it is kept.
- Keep your Will updated. Your Will and other estate planning documents should be reviewed every three to five years. Making a Will is also not something you do just once during your lifetime. As what you own changes over your lifetime and as your family situation changes—marriage, births, deaths, divorce, etc.—you will need to review your estate plan and determine if God has different purposes for how your assets should be distributed at your death.
If you have life insurance, an IRA and/or other contractual death benefits for which you can designated a beneficiary you need to make sure the plan for distributing those benefits (your beneficiary designations) is coordinated with the written plan for estate distribution under your Will. This includes designating trusts for young children as the beneficiary of life insurance and/or other death benefits, rather than the children themselves, and making sure you have designated alternate/contingent beneficiaries of all such benefits.
What impact does the way in which my assets are titled have on how my assets will be distributed at my death?
Your Will controls only assets titled in your name alone (“individually-owned”) and assets that you have designated to be paid to “my estate” or “my executor”. Who receives jointly-owned with rights of survivorship assets at your death is not controlled by your Will—the ownership of those assets will pass to the surviving joint owner(s) at your death by operation of law, not by the provisions in your Will. Therefore, as you develop your plan for distribution of your assets at death, you must consider how your assets are titled and coordinate that with the provisions of your written plan (your Will).
Prayer Focus: Take time now to ask God to reveal His plan for how your assets should be distributed at your death.
Next Week: Fine Tuning Your Testamentary Plan
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.