Welcome to this second blog in our series on Estate Planning. In the first part, I covered the importance of Estate Planning and key steps you can take to ensure it protects your values. If you haven’t read it, I encourage you to start here. In this blog we look more at why thoughtful planning matters when leaving an inheritance to your children.
Estate planning may be one of the most critical strategies you can employ and is a key part of finishing well; and yet many people delay it. However, the peace that you get from having it done– and done well – is well worth it. Leaving an inheritance to your children is not only Biblical, but also something we look forward to as parents. After all, building wealth isn’t just for our benefit, but for our children and grandchildren as well.
Having said that, there are a few important things to keep in mind. Choosing the best inheritance will depend on your children’s ages and stages and will require careful consideration of what will be most beneficial for their future.
Here are some important factors to consider when leaving an inheritance to your children.
HOW NON-ESSENTIAL WEALTH THREATENS THOSE WE LOVE
“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
Helen Keller
Non-essential wealth is any financial asset that is not necessary for your loved one’s mental, physical, or spiritual wellbeing. This can be in the form of monetary gifts, luxury goods, or even lavish experiences that do not contribute to your child’s overall growth in life.
I’ve come to realize that non-essential wealth can be harmful to our children’s growth and maturity. In my opinion, it impoverishes humility and gratitude and fosters an unhealthy focus on self-sufficiency.
Without the real-life experience of working hard, learning the value of a dollar and even struggling a bit, young people will be prone to use money to make their problems go away and avoid the inner changes that need to take place. A lack of maturity usually accompanies children who receive large amounts of non-essential wealth with no direction or advisement.
While money can be a blessing to the next generation, too much given at the wrong time can strangle gratitude and short circuit the lessons that help shape character. Out of everyone I know who inherited significant wealth, only one handled it well. For others it caused problems and stunted their growth. When I look back on my own life, I know it would have changed me – and not for the better – if I knew I had a large inheritance coming. It was this same thinking that led us to lean in and have the conversation on what to leave our children. It took time to gain clarity on the details of our estate plan, but we cared about what our children would receive – not just in wealth, but in terms of wisdom.
I share more about this in my handout on this topic. Consider printing it as a visual reminder of how non-essential wealth threatens those we love.
WHAT KIND OF AN INHERITANCE TO LEAVE
When we think of leaving an inheritance to our children, we automatically think of money. However, there are many assets we can leave to our children including family heirlooms, jewelry, artwork, or other valuables. Other assets include your business, intellectual property, or personal property.
If you need help deciding what kind of inheritance to leave your children, meet with an estate planning attorney to discuss what will be most helpful and meaningful in the long run.
IF YOU HAVE OLDER CHILDREN – KEEP ASKING THE RIGHT QUESTIONS
Our goal has always been to help our kids grow into capable, grounded adults while we’re still alive. Being present throughout their financial learning curve
has been very rewarding for Kathy and I. Over the years we’ve watched how each child handles money. We have seen their values, generosity and financial maturity grow.
Watching this increased our confidence over time. Had we passed away when they were in their teens or twenties, they would have needed much more structure. I don’t believe a large inheritance would have served them well at that stage.
When we first developed our plan, our goal was to keep our family ranch in the plan and set aside enough capital to maintain it for a meaningful number of years. Kathy and I viewed it as a legacy asset – a place filled with memories and meaning; and we wanted it to stay in the family.
Our children have now grown and started families of their own and a few years ago we sat down with them and sought their input. Their collective response was honest and incredibly insightful – they didn’t see themselves having the time or the lifestyle to manage the ranch like we did. Our kids understood that if they weren’t using the ranch enough, they would eventually sell it, and the proceeds would go to Servant’s Heart Foundation. This helped us see the futility of paying estate taxes on an asset they weren’t going to utilize or keep. This conversation allowed us to edit our plan – and that saved our estate from unnecessary cost and confusion down the road.
That wasn’t the only conversation we had with our kids regarding our estate. A few years later we asked them how much money they wanted us to leave in the Foundation for them to give away – a small, medium or a large amount. They collectively came to an agreement and said they wanted to be left with a small amount – for two main reasons. One – they did not want to take away the joy of giving from Kathy and I and wanted us to be free to give whilst still alive. Secondly, they were realistic about their capacity and did not want to carry the weight of a large Foundation.
This feedback shaped our plans again. We don’t see the foundation lasting forever because we don’t view it as family legacy or wealth. Our focus is on meaningful impact now. The sooner we can give the money away; the sooner it will impact lives. This has always been our goal. Hopefully, Kathy and I live long enough to give most of it away ourselves but even if we don’t, our kids understand our vision and will work to wrap up the Foundation within a few years.
If you have older kids, I encourage you to talk to them and listen to their thinking. They will surprise you with the insights and perspective they have. Inviting them into the process not only honors them – it equips them too.
ENCOURAGING DEPENDENCE ON GOD
In John 15:5, Jesus said, “I am the vine; you are the branches. Those who remain in me, and I in them, will produce much fruit. For apart from me you can do nothing.”
This verse is a reminder that no matter what kind of inheritance we leave for our children, the inheritance of our faith far surpasses our earthly assets. Encourage your children as often as possible to put their trust in God and abide in Him. Remind them that every blessing they’ve been given is from the Lord, and in Him, they can live fruitful, abundant lives.
In 1 Samuel 2:7, we read, “The Lord makes some poor and others rich; he brings some down and lifts others up.” This passage points to God as the One in ultimate control, and honestly, it’s much easier for me to be dependent on God when things are out of my control. Leaving an inheritance of thankfulness, humility, and reliance on the Creator is the most important inheritance we could leave behind.
ACTION STEP
Estate planning is more than leaving money and assets; it’s about taking the time to determine what will truly serve the people you love. Will what you leave help or harm them? Will it bless or burden them? Are your assets and legacy pieces more valuable to you than to them? I encourage you to wrestle with these questions. Talk about it with your spouse and hear from those who are ahead of you in the process.
Set a date with your wife and decide together what kind of inheritance you want to leave to your children. Create a first draft that you can build upon in the days ahead.
I pray this post has been helpful and encouraging. I enjoy reading your views and receiving your feedback. Your views also help to encourage other readers on the blog; so please share in the comments section.
