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Is Your Christian Estate Plan Like The Lottery?

Some have said that children who receive their inheritance go through it as fast as a lottery winner goes through his/her winnings: about three years. If that is true, then the way inheritances are planned and distributed to heirs needs vast improvement.

I’ve also commonly heard experts say that the principle reason the wealth disappears so fast is that heirs had to pay enormous estate taxes and were left with less than half of the estate. Is that true? In a large estate (over $10 million), it is true that over 40% of the estate can go to pay estate taxes. But that still leaves a large estate for those that are exposed to estate tax, so why do the statistics say that heirs tend to exhaust most of the estate in just a few years?

Hint: It has more to do with trust and communication than estate taxes…

No matter how thorough your legal documents are, if you have not done the necessary communication and preparation of your heirs to receive their inheritance it is unlikely the intentions you have with your estate gifts will be carried out. In this post, I’ll cover three examples of how poor communication and preparation for receiving an inheritance can drastically derail your plans and what you can do to prevent it.

1. A father never turned over any of the responsibility of managing the family’s substantial investment portfolio to his sons because, “They could never manage the money as successfully as I do,” the father thinks.

He’s correct. He’s correct now, and he’ll be correct after he’s dead. The sons will never learn to manage money because Dad never trusted them enough to let them try or took the time to teach them through less risky trials on how to be effective money managers. The first time the boys get their hands on the money, Dad, who could have been their best teacher and coach, is dead. He has left them adrift at sea with millions of dollars, no idea how to manage it, and no one they trust to advise them.

No trust + No training + No communication = Bad outcome.

Unfortunately, this is not an isolated example. It is almost routine among wealthy families both Christian and unbelieving.

2. Another example is the parents who do not reveal to their children how much wealth the family has because they don’t trust them with that kind of sensitive information. The children learn about the amount of wealth Mom and Dad had in the lawyer’s office as he is reading the Last Will and Testament of the last surviving spouse. They quickly discover they are completely ill-prepared to manage the family’s multimillion dollar wealth.

Not only are the children blindsided with this information in a time of grief, but they often feel hurt by the concealing of it. They may ask questions in their mind such as: Did mom and dad not trust us? Why did they think they had to hide this from us? Did they think we would only love them or use them for their money or try to get it? The questions about equitable distribution or lack thereof may also cause severe distress between heirs. When parents take the time to explain lovingly their decisions and communicate how much thought they have given to their planning in order to make their wealth a blessing to them and be obedient to the Lord it can become a bonding process for even estranged children.

No trust + No communication = Bad outcome.

3. A third example is parents that are giving substantial amounts of money to charity every year yet don’t incorporate their heirs into the decision-making process or the hands-on involvement of where those gifts have been deployed.

It is quite common among wealthy families for their children to be resentful of the family’s wealth. They often see Dad as being greedy, consumed with power and living an opulent lifestyle. They regularly see the family’s wealth as being something evil. They frequently take the side of those who are down and out, the weak and the poor. Some see their parents as the enemy. These children intentionally go to the other extreme in their lifestyles rejecting this cursed disease of “affluenza”.

The heirs do not see that Dad is paying his employees extremely well and helps them when they have family issues or life-threatening illnesses. They do not see that Dad and Mom have been on numerous mission trips. The kids do not see any of this, nor do they understand or participate in giving. Why? They do not see any of it because there is little or no communication or trust on the parent’s side.

No communication + No involvement = Bad outcome.

When parents do not communicate with the children about their wealth and their giving, they cheat the children of one of the most valuable lessons possible while they are alive.

If wealthy families and those that are not so wealthy are going to preserve an appropriate amount of their wealth in the family for future generations to enjoy and use for good, they must do more than simply implement financial techniques and tax saving strategies for their estates.

Going to a capable estate planning attorney is one step in the process of planning your legacy, but is appropriate only after you have done a lot of work creating a vision statement and meeting with the children. Our Christian Family Legacy process takes a radically different approach than the traditional planning process. Through the five-stage process, Christian families successfully pass on and ensure that future generations will retain the wealth that their parents give them. The families also and most importantly grow closer through numerous family meetings and ongoing communication and education.

The legacy that you pass on to your heirs is not just money. It is your values, your virtues, and your faith. Planning your legacy is a collaborative process that works with all advisors and all family members to produce a plan that reduces taxes significantly, but also, creates an effective communication process that builds trust and the skills necessary to manage the wealth and encourages generosity.

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joe-sturnioloBy Joe Sturniolo
Christian Family Legacy and Wealth Planning
Joe believes that stronger families are the vehicle God uses to bring
about significant impact for His Kingdom.

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