Estate issues can be one of the toughest topics for families to address. Parents often have intentions to give charitably and to their children at death, but the plan for how their giving will be accomplished remains vague for a variety of reasons.
“Most Americans, particularly as they get older, have a fear of not having enough money to last throughout their lifetime,” says financial expert, Ron Blue. “This fear is one of the greatest obstacles to experiencing the joy of giving.”
In order to overcome that fear, many Christian financial advisors recommend a different approach – the “financial finish line.” There are a number of ways a financial finish line can be applied. It can come in the form of a lifestyle cap, or a maximum you will allow yourself to have in your investments and other accounts. It might mean you always live simply and never allow yourself to make certain expensive or unnecessary purchases.
The decision is yours to make, but it’s important to do in advance because, as your wealth increases, so do the endless ways to spend, save, or invest it. The Bible warns that those who have wealth may grow to love it, and once they love it, it will never be enough (Ecclesiastes 5:10-11).
The moral of that story? If you haven’t committed to a finish line, your limits will undoubtedly get pushed further and further away.
A financial finish line takes some thoughtful consideration. Here are some questions to help you get started.
1. Why has my family been entrusted with resources?
This is a highly personal question that goes straight to the heart of the matter. What is the purpose of wealth, in general, and what is the purpose of your own family’s wealth? We are all called to know Christ and make him known. But there are personal applications of this truth that are unique to your family. What are they? Consider discussing them together with your family or other heirs.
Over the next 40 years, it’s estimated that about $60 trillion will pass from older Americans to younger generations. That’s $1.5 trillion in wealth that will change hands every year.
When it comes to intentions for your wealth as a family, you need to understand how to further your purpose by leveraging the resources and capital God has entrusted to your care. He has allowed you to acquire, use, manage, and dispose of the wealth you’ve been given.
2. How much is enough for my family and me?
After a person has acquired and preserved wealth, how should it be used? To answer this question, a clear definition of the financial finish line becomes essential. It can be a salary cap or a refusal to increase lifestyle as salary increases, a commitment to stay in a small home or not to buy expensive vehicles. It can take any shape you decide. The important thing is the commitment you make to honor God with money.
For example, years ago, the late Rich Mullins, who was a popular Christian musician at the time, made a more extreme and specific choice when he realized his music could lead him toward the accumulation of great wealth. He handed over management of his finances to trusted accountants and asked them to pay him a modest salary, whatever was the average salary of an American worker for that year.
Rich reasoned that Jesus identified with the poor, and he wanted to be like Jesus. He believed making too much would render him less able to identify with the poor, becoming a hindrance to his relationship with Christ. He gave his money to local churches, music programs for Native American children, and he was a big supporter of Compassion International.
As another example, one NCF giver said she has given her accountants a number. If the amount in her accounts surpasses the number, they are to put all the extra money into her Giving Fund (donor-advised fund) immediately. This way, she never has more than the finish line she set for herself.
Everyone sets a finish line differently. The key is in being specific and sticking to it. Although the target may need to change over time, depending on your circumstances, the process of trying to determine how much is enough is still helpful. The end result is recognizing that an estimated amount, or range, is enough.
3. How much should I give to the next steward?
Don’t forget to consider who your next steward is, and if they are prepared. Most parents give very little thought to this question. The default plan is to divide the remaining estate equally among the heirs, pass on as much as possible at the lowest possible tax cost, and never discuss those plans before death.
But this approach overlooks crucial factors of wise stewardship, such as instilling a good work ethic and preparing children to manage wealth with grace and generosity. Making conversations about money and stewardship a regular part of your communication with your heirs from a young age is a great way to achieve clarity about your decisions and agreement among family members.
The Bible tells us to value wisdom more than wealth. Ecclesiastes 7:12 says that wisdom is a better protector of our future than money, but how few of us plan to get more wisdom for retirement!
We cannot forget the importance of training our children in wisdom. Have you instilled in them a strong, biblical worldview? Do they understand the purpose of your family’s wealth as you do?
It is up to us, as parents, to instill wisdom in our children before we give them our wealth and to train them in the uses and purposes of wealth over time, so they are prepared to one day become our heirs.
4. Should I give now or later?
Once you’ve determined how much is enough for you and your heirs, the rest of your estate is free for giving. Why wait? By giving now instead of waiting until after death, you may enjoy lower taxes today and have the benefit of seeing and experiencing the impact of your giving through your family.
And you can incorporate giving into family traditions, so you can enjoy watching your kids and grandkids experience the joy of generosity as they grow.
Start with generosity
Setting a lifestyle finish line is one of the most important keys to preparing a generous family. “When I ask the question, ‘How much is enough?’ most people immediately start to think about how much money they need to live on, or to save, or to achieve their long-term goals,” Ron Blue says. “These considerations are important, but I challenge givers to look at the question another way – How much is enough to give?”
Instead of trying to figure out how much you can give out of whatever’s left over, he suggests flipping your perspective. “Start by asking yourself how generous you want to be, and you just might discover the answer to true wealth.”