FAQ

Probate is simply each state’s set of rules for governing the administration of your will, or for distributing all your earthly goods in the event that you die without an estate plan. The term “probate” comes from a phrase that means “proving the will,” so by that very definition, if a will is used to transfer assets to beneficiaries, those assets will necessarily be subject to the probate process. If you want to avoid probate, then the tool to use as your primary estate distribution document is not a will, but rather a revocable living trust.

A revocable living trust is an instrument that you establish during your lifetime. Like your will, the trust determines what will happen to the assets of your estate at the time of your death. Unlike a will, however, assets that are in the revocable living trust at the time of death will transfer to your beneficiaries completely outside the probate process.

In establishing a living trust, individuals or couples would typically name themselves as the trustees or co-trustees, and they would maintain the ability to control and benefit from their assets for the rest of their lives. If you are incapacitated before death, a successor trustee whom you have named ahead of time manages the assets of the trust for your benefit. Then, when death finally occurs, the assets that you placed in the trust during your lifetime will be transferred to your beneficiaries free of the probate process.
 

One of the most important things families need to address, regardless of estate size, is the question of who should take responsibility for raising minor children if Mom and Dad die prematurely. Deciding whom to name as guardian for your young children is critical.

We recommend that you select as guardians, first of all, a family who shares your spiritual values and who will raise the children using the same godly principles that have guided you.

It’s also important that they be in the same stage of life as you; couples who have already raised their children (including your own parents) may not welcome the challenge of starting afresh to raise the children you may leave behind.

Another important consideration has to do with the location of the guardians. We recommend that you choose guardians who live nearby, if possible, so your death does not also mean that the children will be uprooted from their neighborhood, their church, their school friends, etc., and moved to another city or state. The trauma of losing Mom and Dad could be dramatically magnified if a cross-country relocation is required.

We recommend that you grant durable power of attorney for property management to a trusted individual. This will enable that individual to manage the assets in your estate, should you become incapacitated before death. Secondly, we recommend that you also grant durable power of attorney for health care decisions to a trusted individual; this will enable that individual to make health care decisions for you, should you become unable to do so on your own. Generally, married couples will name their spouses for both duties and one or two alternates in case the spouse is unable to serve. In addition to the durable power of attorney for health care, many people wish to establish a physician’s directive, which sets forth your wishes for providing critical health care in the event that you find yourself terminally ill with no hope of recovery.

Generally, arrangements would be made, whether using wills or a revocable living trust, to leave the estate to the surviving spouse at the death of the first spouse.

At the death of the surviving spouse, if the children are too young to become responsible stewards of their inheritance immediately, the estate would go into a children’s trust to be administered by a trustee you have chosen ahead of time - someone who can manage money, and who can work with the guardian.

At some point, the children will be financially mature enough to receive the inheritance on their own without further supervision. Typically, this might occur when the children have reached the age of 25 or 30.

Generally, a children’s trust is not divided among the children all at once, because the thinking is that if the parents die early, the children may have missed some important life lessons growing up. Instead, the trust is terminated in stages—perhaps a third going to them when they reach age 25, half the balance a few years later, and the remainder another few years down the road.

For families who want to benefit ministries, the ministries can be included in the plan from the beginning, but the documents are usually structured in such a way that if the parents die while the children are still young enough to need the children’s trust, nothing goes to charity at that time; rather, everything remains in the children’s trust for the benefit of the children until the division date of the trust. At that point, the children are grown, they have received their education, and they are no longer dependents in the biblical sense of the word; the value of the estate can then be allocated among children and ministries in whatever percentages you choose

There are several ways that families determine the allocation of the estate between children and ministries once the children are grown. Keep in mind that as long as the children are young enough to depend on the children’s trust, nothing is given to charity; however, once the children have been educated and helped into their first homes to whatever extent the parents choose, many Christian families decide to designate a tithe of their estate for the Lord’s work. Tithing in this context does not seem particularly scriptural, since tithing in scripture relates primarily to income. In estate planning, remember, we are determining the ultimate stewardship of the capital we have accumulated over a lifetime of work; nonetheless, tithing is a familiar percentage to believers, so that’s often the percentage that people choose to give to ministries.

Even more frequently than tithing, we see families treating charities like an additional child once the children are grown and independent. If a family has three children, they might carve the estate into four equal parts, giving each of the children 25% of the estate and dividing the remaining 25% among their ministries. We think of this as creating a “child called charity.” Families seem to like this approach because it clearly expresses the value they place on perpetuating and participating in the work of the Lord.

Thoughtful planning can also result in a decision to cap the children’s inheritance at a certain level and leave the excess to ministry.

Two biblical perspectives affirm the idea of leaving the estate to a combination of children and charities. The first priority we see in scripture is that of dependency: Timothy says that we are worse than infidels if we fail to take care of those in the household of faith. As a Christian, it’s difficult to imagine anything worse than being called an infidel! The phrase “those in the household of faith” refers to our financial dependents. Obviously, minor children are financially dependent on their parents, and anyone who has raised children understands only too well that their dependency doesn’t necessarily end the day the children turn 18. Financial dependence can extend beyond that, hopefully on an annually diminishing basis, but experience, wisdom, and scripture agree that it is important for children to learn to stand on their own financially. In much the same way, ministries that have been important to us over our lifetimes—places where we have worshipped, mission organizations in which we or our friends have served, schools in which our children have been educated with a Christian worldview, and other kinds of ministries that we have supported during our lives—have become dependent upon us in a very real sense.

The second biblical perspective that should impact this discussion is that of love. John 3:16 says, “God so loved that He gave,” and in that context, we have the freedom to do whatever we feel God is leading us to do for people and ministries that we love.

Our answers are as varied as our families and our charitable interests. The point has already been made that if children are not yet old or experienced enough to be entrusted with direct stewardship of their own inheritance, their inheritance should be in the form of a trust, and their access to those funds would be through the approval of the trustee you have selected to manage those funds. Once children reach an age of financial maturity, the traditional thing to do is to terminate the trust and give the assets directly to the children. Increasingly, however, families are finding it inappropriate to give all of the children’s inheritance as an outright gift of capital. Supporting that idea, a recent study indicates that the average outright inheritance is spent within eighteen months of its receipt.

Sometimes, parents are concerned that children may not have the financial wisdom to manage capital wisely, so they choose to leave all or part of the inheritance in the form of an income stream that could last many years into the future - even for the children's lifetimes. In other instances, parents may be concerned about future liabilities associated with the potential for lawsuits or divorces that their children may be subjected to; in those instances, it can make sense for an inheritance to be protected in a trust that can last for the child’s lifetime, with the residue passing to succeeding generations or to ministry at the death of the child.

It isn’t unusual to find that couples have put off their estate planning, sometimes for years, because of lifestyle or work ethic concerns about one or more of their children. We believe that it’s important to return to this fundamental definition of estate planning: determining the stewardship of what God has entrusted to you when you can no longer serve in that capacity yourself. The implications of this for families whose children have varying levels of financial maturity or degrees of agreement with the family’s spiritual values should impact the overall design of your estate plan.

A careful reading of scripture relating to inheritance uncovers no example of children all being treated the same; rather, in the Old Testament, the guiding principle was that the oldest son received a double portion of inheritance, and daughters were considered part of their husbands’ families as far as future financial support was concerned. While this may sound jarring to our Western ears today, we can observe people around us and quickly understand that God has given us different levels of access to the riches of this life. Some of us may have stewardship over a great deal of money, while others have struggled financially all our lives.

In the end, however, God seems to tell us that He wants us to be content, and that He wants us to trust His provision in all things. So, designing a “Christian” estate plan has far less to do with the tools and techniques brought to the table than it has to do with seeking the Lord’s will for what He has entrusted to us. Generally, families want to treat all their children the same - but in some instances, that’s just not wise.

This is an issue that you’ll need to pray through. Some questions you may want to take into account have to do with the overall size of the estate and the tax impact of leaving larger amounts to children. Another consideration should be to examine the values, work ethics, and lifestyles of your children. Our understandable desire to be generous to our children is often tempered by the realization that receiving too much too soon may be more harmful than helpful.

The story of the Prodigal Son, among other things, is a story about a father who readily gave a generous inheritance to a son who had not yet learned how to be a good steward. The prodigal blew the inheritance and ended up living with pigs. Ultimately, this process of loss and devastation was redemptive in the prodigal’s life, and led to a wonderful reunion with the father. So it isn’t our purpose here to suggest what anyone “ought” to do; rather, we believe it’s important to think and pray through these considerations carefully in planning for one’s estate distribution.

A reading of Genesis reveals that God has always intended for us to earn what we have through our labor, rather than as an easy gift of worldly goods; after all, in the Garden of Eden, Adam was given a work assignment from the very beginning—the work of naming the animals. The primary thing that changed when sin entered the picture was that God introduced sweat, saying that now we would have to earn our living by the sweat of our brows. God intended for us to work from the beginning, but in His perfect design, our work was supposed to be more easily productive; it simply became more difficult after we entered into sin.

Your estate documents can be a wonderful opportunity to leave behind a written testimony of your faith in Christ. D. L. Moody’s will contained this great passage as a lasting expression of his eternal confidence in Christ: “You may have heard that I died. Nothing could be further from the truth. I am alive and well, enjoying the presence of God for eternity. It’s my hope that you will take great joy in my recent promotion. It’s also my prayer and request that if you haven’t discovered the truth about God sending His son to die on the cross so that none should perish, you will seek His truth with great urgency as a personal favor to me.”

Another enduring, clear statement was left by Patrick Henry, one of America’s Founding Fathers, who said, “If I had all the goods this world can offer but had not faith in Christ, I would amongst all men be poor indeed.”

Whether you use a will or a trust, you can include a love letter to your loved ones, affirming and encouraging them. Consider joining the countless Christians who have made such statements, either by incorporating them into the text of their documents, or in letters to be found with their documents following their deaths. Such statements will indeed be treasured by those you leave behind.