Planning the Estate of a Christian

From the booklet Leaving a Legacy. To find out more about how to fulfill your goals for leaving a spiritual legacy, download or request our free booklet.

Planning the Christian Estate by Ed Barnhill, Esq.

"Honor the Lord with your wealth and with the firstfruits of all your produce;" (Proverbs 3:9)

A Last Will and Testament has long been a most favored way for Christians to distribute those assets which God has entrusted to them. The Bible tells us that a Last Will and Testament "speaks" after one's death.

For where a will is involved, the death of the one who made it must be established. For a will takes effect only at death, since it is not in force as long as the one who made it is alive. (Hebrews 9:16-17)

This information has been made available by The Alliance of Confessing Evangelicals to emphasize the importance of planning the estate of a Christian.

Basic Considerations

Many people mistakenly believe that they do not need a will. Every state has laws which govern the distribution of the assets of those who die without a will. These laws vary from state to state and may completely ignore your wishes and the specific needs of your family. Christians, as stewards of God's abundance, have a duty to properly manage these assets. With a will, you prescribe how your assets will be distributed to your heirs. You can make special provisions for those with unique needs. For example, you may set up trusts for minor children who are too young to manage their finances. After your obligations to your family are met, you may desire to return some of the remaining assets to the Lord through charitable gifts to the Alliance. Without a will, the state decides who receives your estate and what each share shall be.

With a will, you may direct who shall serve as guardians for your minor children. Without a will, the court appoints the individuals who will raise your children. With a will, you dictate who shall serve as the personal representative (executor) of your estate. The personal representative is the person or persons in charge of collecting, managing, and distributing your assets. Personal representatives must be bonded, with the estate bearing the cost of the bond. However, if you have a will, you may legally waive the necessity of a bond. With a will, you may utilize tax planning strategies which minimize the amount of state and federal estate taxes which your estate is liable to pay. Marital deduction trusts and charitable bequests are typical devices which can reduce or eliminate any taxes for which your estate may be liable. With a will, you can continue your testimony after death. The preamble is the introductory paragraph to your will. It can be used to relay your testimony to those who survive you. The following is a suggested preamble, but you may create your own:

I, (NAME), hereby acknowledge and proclaim my faith and trust in Jesus Christ as my Lord and Savior. By virtue of that faith in His redemptive death on the Cross for my transgressions, I shall live and reign with Him in an immortal and glorified body throughout eternity. '   As a consequence of the forthcoming death of my earthly body, I do hereby   declare this to be my Last Will and Testament for those assets which God has entrusted to me, and I do hereby revoke all Wills and Codicils that I have previously made.

What Steps you should take

Wills should be drafted by an attorney who specializes in estate planning. Being prepared for your meeting with the attorney will enable your attorney to expeditiously accomplish your desires.

How you can prepare for the meeting with the attorney:

1. List the full names and addresses of all members of your immediate family.
2. List all your assets, their current value, and how they are titled (include life insurance, real property, bank accounts, C.D.s, securities, etc.)
3. List all your debts.
4. List guardians and alternate guardians for your minor children, if any.
5. List any Christian organizations that you favor.
6. List your Personal Representative and an alternate Personal Representative.
7. List any specific needs of your family.
8. List any specific questions which you have for your attorney regarding your estate plan.

How to Remember the Alliance of Confessing Evangelicals in Your Will and Estate Plan

The following are the principal methods for favoring the Alliance in your will:

1. Specific Bequests

   A. Percentage of your estate: “I give to the Alliance of Confessing Evangelicals _____ percent of my estate to be used by its Board of Directors for the ministry of the Alliance of Confessing Evangelicals.”

   B. Specific amount: “I give to the Alliance of Confessing Evangelicals, 600 Eden Rd., Lancaster, PA 17601, $_____, to be used by its Board of Directors for the ministry of the Alliance of Confessing Evangelicals.”

   C. Specific property: “I give to the Alliance of Confessing Evangelicals, 600 Eden Rd., Lancaster, PA 17601,  the following described property:__________, to be used by the Board of Directors of the Alliance of Confessing Evangelicals.”
    

2. Contingent Bequests

Should any designated beneficiary not survive you, any bequest or devise made to them may be alternatively designated for the Alliance of Confessing Evangelicals. For example:

"If any of the above-named beneficiaries should fail to survive me, then I hereby give the property, real or personal, which each beneficiary would have received had they survived me, to the Alliance of Confessing Evangelicals, 600 Eden Rd., Lancaster, PA 17601, to be used by its Board of Directors for the ministry of the Alliance of Confessing Evangelicals.”

3. Residual Bequests
A residual bequest is a bequest that is made after all specific gifts have been designated. An example of a residual bequest is as follows:

"All the rest, residue and remainder of my estate, including property over which I have a power of appointment, and all real, and other personal and intangible property, of whatever kind, character and description, and wheresoever situated, I give, bequeath and devise to the Alliance of Confessing Evangelicals, 600 Eden Rd., Lancaster, PA 17601, to be used by its Board of Directors for the ministry of the Alliance of Confessing Evangelicals.”

Basic Questions

QUESTION: How often should my will and estate plan be reviewed?
ANSWER: Approximately every three years, unless there is a major change in the tax laws or a significant change in family circumstances.  
                                   
QUESTION: If I have a small estate, do I need a will?
ANSWER: Yes. If you do not have a will, then your property will be distributed pursuant to the intestate laws of your state which may not accomplish your desires.

QUESTION: What is the Federal Estate Tax?
ANSWER: The Federal Estate Tax is an excise tax on property passing from a decedent upon his or her death.

QUESTION: What is a charitable remainder trust?
ANSWER: A charitable remainder trust is a trust which pays an income interest to one or more persons for a fixed term of years, or for life, or for a life or lives. When the income interest ends, the remaining trust assets are distributed to a charitable organization. The income interest must be in the form of an annuity of a fixed dollar amount, or a "unitrust" interest (a fixed percentage of the annual value of the trust assets). The annuity must be not less than five percent of the initial value of the trust assets, and the unitrust percentage must not be less than five percent. The usual purpose of a charitable remainder trust is to provide an income interest for a beneficiary, while also obtaining a charitable deduction for the remainder ultimately passing to charity. Since the charitable deduction will reduce estate taxes, and increase the initial value of the fund, a charitable remainder trust may produce a larger income for a beneficiary than would be available without the charitable deduction. (The actual results depend upon the age of the beneficiary.)

Other Estate Planning Techniques

Estate planning can also involve many other useful techniques, such as living trusts (revocable and irrevocable), lire insurance trusts, gift planning, charitable remainder trusts, charitable gift annuities, etc. These more complex estate planning techniques are often useful in reducing the impact of income and estate taxes.

To find out more about how to fulfill your goals for leaving a spiritual legacy, download or request our free Leaving a Legacy booklet.