Welcome to this five-part series on Estate Planning. Most of us spend our lives building wealth, but few stop to ask how that wealth will shape the next generation. In this series I share with you ways on how to steward your wealth well and pass on what matters most.
An inheritance obtained too early in life is not a blessing in the end.
Proverbs 20:21
I didn’t grow up with a large inheritance or financial safety net, and to be honest, I’m grateful for it. I had a modest upbringing and never felt we lacked anything. My parents owned a home and when they passed it was split between my two brothers and me. That was the extent of our inheritance.
From a young age I learned that if I wanted something extra, I had to work for it. I never received an allowance, so I started businesses at an early age. I quickly learned the value of hard work. Looking back, if I had expected to inherit a large sum of money, I believe it would have changed me – and not in a good way.
MORE THAN MONEY, WHAT WILL THEY REMEMBER?
Early in our marriage, Kathy and I talked about inheritance. Surprisingly, we both felt strongly that we did not want to leave our children so much money that it would change the trajectory of their lives or work ethic. That conversation helped define and shape how we thought about our estate.
I remember coming home one evening and sharing with Kathy how much our kids would inherit if something happened to us that day. Her immediate response was ‘that’s too much!’ and I felt the same way.
We then sat down to evaluate what was important as far as defining our estate and the values that would guide what we left our children. At that point all we had was a percentage that was going to different ministries locally and around
the world, and a percentage that was going to the kids. However, our net worth had grown, and it became clear we needed to re-evaluate. That’s when God gave us an inspired idea that helped guide us – give to your kids what you would give them if you lived to be 100 years old.
Think about that. If we lived to be 100, we would still be walking with our kids, speaking truth into their lives and offering help when we could. But if we passed away early, all we would leave is money – with no voice attached, and that kind of wealth, without wisdom, can quickly do harm.
ALIGN IT WITH YOUR VALUES
Over the next year, Kathy and I sat down and created a list of all the things we would want to do for our children and grandchildren if we lived to be 100. We built our plan around our values and came up with a list of practical things we would like to do and how we desired our family to operate:
Down Payment on a Home
When they were in their early teens, we told our kids that if they saved for a house, we would match it two to one. That motivated them. All three of our children became savers and none of them carry credit card debt. When they became adults, all three received a match to their savings. You can read more on how we raised our children to have a proper understanding of finances in my blog Raising financially independent children.
A Solid Education
We have always prioritized a Christian education, Kathy and I agreed we would contribute towards university education.
Provision for an At-Home Parent
We both also highly valued the role of a stay-at-home Mum. We therefore included a provision that if one of our daughters or daughters-in-law chose to stay at home, we would contribute half her wage. This would help ease the burden – but not remove the sacrifice.
Family Travel
We love to travel as a family and enjoy the undivided time it gives. We therefore added a travel clause to our plan. As long as the three kids were travelling together, every other year we would fund a trip up to a set amount per adult and per child. Spouses and children were optional, but sibling connection was required.
Medical
We also considered emergencies – things that you cannot plan for but are urgent – such as medical needs. For example, if a grandchild needed expensive treatment.
These are just a few of the items on our list.
CRAFT A PLAN THAT IS UNIQUE TO YOU
As we developed the plan, we knew we wanted to help and support our children but did not want to leave substantial amounts to ‘just in case’ situations.
Our solution therefore was to set up two trusts. The first one was a personal trust, where each child received a certain dollar amount with limitations on how and when they could access it. The second was a ‘general welfare trust’. We designed it to work as if we are still alive with 20 specific scenarios where they could ‘ask Mom or Dad’ for help. I share more on Creating a Trust that works later in this series.
One thing I would encourage you to do is: review your estate plan every two to three years. You and your spouse will be surprised at how much changes – your heart, your finances, your world. What made sense three years ago, may feel off today – regular reviewing helps to curb this.
GUARDING AGAINST A SENSE OF ENTITLEMENT
One of the best decisions we made was not telling our children the details of their inheritance. We wanted the flexibility to adjust the plan as needed, without creating false expectations. In my experience, once a child knows they’re receiving a certain amount, it’s no longer viewed as a gift, and it becomes ‘theirs’. And if by chance the amount changes, the parent becomes ‘the bad guy’.
Instead, we have always made it clear that they will receive something, but not a lifestyle-changing amount. We want their lifestyle to be determined by their choices – not what we leave them. They’ve known this for a long time, and they understand they are part of a family whose view on why we have more than we need isn’t just so we pass it onto the next generation, but so we can bless others as well. We are blessed to be a blessing.
ACTION STEPS
As you consider your own estate plan, here are 2 questions I would encourage you to reflect on:
- If you passed away today, would your estate reflect your values?
- What would you want to do for your children if you lived to be 100 years old?
Remember to revisit your plan regularly and make adjustments as your heart and circumstances change.
Don’t underestimate the impact of aligning your estate with your convictions. Wealth without wisdom can damage far more than it helps; but when you pass on values alongside with provision, you leave a legacy that builds and lasts.
