Ep. 092 - How Much Should Christians Save for Their Heirs?

Episode Transcript

Austin
For many believers with surplus wealth. The question isn't just how much is enough for me. It's how much is enough for my heirs. Today we'll explore how to discern when to stop allocating resources for heirs and start directing more toward kingdom purposes.
All right, so, Spencer, over the last couple of episodes, we've been diving into this idea of finish lines, and we're going to talk in our next episode about how do we actually actually communicate those finish lines to our heirs. But today we want to talk about how do we actually set caps or finish lines for heirs. So this is oftentimes one of the most challenging aspects of setting finish lines because it involves both stewardship and relationship.
We have a stewardship piece here that says these resources are not mine. They are the King’s. They are God's to begin with. And so I need to steward them well. But when we're dealing with generations well, the generation below me may not believe that they are stewards. Ideally, yes, we have walked with them. We have discipled them towards knowing what is good and true and beautiful, and that all of these resources that God has placed in our hands are not our own, but they're his. But we can't control whether they actually believe that or whether they actually follow that. So this really is a discipleship piece, but why else is it so challenging?

Spencer
I think the number one reason why this is a challenge is that our culture almost universally goes in this particular direction. So you save for retirement, you look for that future, and then you also have in the back of your mind the surplus I'm going to pass on. And the way American culture says you pass on surplus is you take the number of children that you have.
You take your wealth and you divide it by that number of children and you pass it on that way. It's remarkable how universal that is. Now, not everyone, but that is the overwhelming momentum that we see as we sit down with clients time and time again. So if that is the direction of the river that's flowing and it's flowing very quickly, then we have to have a really good rationale.
We have to have a grounding to do anything different and that direction, it could be where you you end up after reflection, after listening to the Lord. But oftentimes it's not. And oftentimes we get back to this idea of finish lines and how we get there, even creatively over time, as we make gifts, not just at the end of life, but through life, to be able to help adjust those finish lines, be it we're reducing it because we've given more earlier, or we're adapting it because we see that the steward that we might be passing those resources on to is more adept or less adept at handling those resources.
So it really there's a lot to this. And it's one of those that even as we see families interact because the culture is going so strong in that direction, both generations need to be aligned to make this really as fruitful as it can be.

Austin
Right. And oftentimes, you know, we'll hear clients that are struggling with how do I communicate this to my heirs? Or I started to communicate and it's not going as well as I thought it would. And I think the challenge that we always are going to come up with is if we have not had this conversation yet with heirs, the first step is going to be really difficult.
But we have to start somewhere. We have to start having these conversations. We have to start really wrestling with what are those finish lines for those heirs? Because if we don't set them until our estate planning is set and then we just write it into our will and we don't tell them about it. It could create, just challenges down the line for them.
And so again, we'll get to that in a future episode. But today we're really diving into how do we what do we mean by finish lines. How do we set those finish lines for the heirs? And then how do we really wrestle with the Lord on that? So again, we've talked about this in the past, but a finish line is simply a way to say this is my cap, this is enough.
This is sufficient for myself, my lifestyle and what I want to pass along to my heirs. For savings. It means stop accumulating once your goal is met, and then with any surplus beyond that number, whatever that number is for your financial plan for your life, then you start saying, how can I accelerate giving or investing in kingdom causes?
And so for heirs again, it means wrestling with what you think that they need, what you anticipate their needs being. And there's going to be a wide array. If you have a child with special needs, it's going to be very different than if you have a son or daughter who is financially set and makes a good amount of money.
Your child with special needs might need a lot of resources through their life to help them continue to maintain a standard of living, whereas your son or daughter that may have a really strong professional career, they may not need as many resources. And so we think about this in terms of what Ron Blue says. And he says, we love all of our children equally.
So therefore we treat them differently.

Spencer
Well and really we treat them with the same amount of love. Because if we give significant resources to a child who has, is doing excellent professionally, we may tempt that child not to work as hard or to have trade offs, that are just not healthy. Now, sometimes, it can still be helpful to pass on those resources in certain seasons of life.
One of the things that we come back to with a lot of our clients, we love it when they're passing on resources, maybe to help with childcare expenses or help with those core needs when their children and grandchildren are kind of in that, season of life where there might be a pinch. So passing on resources earlier to help in those seasons of, you know, financial difficulty, at the end of the day, there's, there's a beauty to growing in the midst of those seasons, but sometimes those seasons can actually break us.
And we see, you know, marriages fall apart with a level of financial stress. And I can tell you many times, I think, okay, these grandparents, they're really helping to preserve their, their children's marriages in some ways by, by helping along the way, whether it's with some direct, income for childcare or whether it's, you know, even providing that, I mean, that can be a huge thing and one of just many, obviously.

Austin
And I see this in my own life. My grandfather was really generous. He started a business in the mid 50s. Once he got back from the war and set up for us a trust that I didn't know that I had until my wife and I were going to buy our first home, and we had saved up a little bit of money for a down payment and we lived in Denver at the time and homes were expensive.
We weren't looking to live in the nicest part of town. We wanted to live where we were doing our mission. But I called my mom and said, mom, we're looking to buy a house. And she said, oh, you know, you have resources that you can tap into. And I said, no, I had no idea. It didn't change where we were looking to live, but it allowed us, like you were saying, a little bit more of that flexibility in a season where our income was low because we were missionaries and we didn't have that much saved, so it just produced it took a little bit of that stress off.
But we didn't take out a tremendous amount. But we took out enough to where we said, okay, we can buy a little bit nicer of a home in that same neighborhood that we don't have to worry; “okay, what is that next step?” And it's been I can't tell you how much of a blessing that is to just relieve that stress.
In a time where we didn't have a lot, we were trusting the Lord, and again it felt like a gift of the Lord's provision. And so when we think about this, it's that that key is really we don't want to enhance the lifestyle of that next generation. We want to afford them opportunities that allow them maybe to, to be stable.
In John Wesley's sermon, that we've talked about in the last episode, “Use of Money” again, he says, gain all you can, save all you can, give all you can. And again, the context here is really critical because we don't want to gain based on ill gotten gains. We don't want to overspend on our lifestyle. We want to be generous in giving.
And really, when he says give all you can, he really means give all that you can be really aggressive and the amount that you give be really sacrificial on the amount that you give. But we'll just read a couple of these quotes that he has in here about giving resources to children. And he starts off this first one talking about if we know that spending on our own lavish lifestyles is damaging to our souls, that we should not do that for us, he said.
He says, why should you purchase for them your heirs more pride or lust, more vanity or foolish and harmful desires? They do not want any more. They have enough already. Nature has made ample provision for them. Why should you be at further expense, to increase their temptations and snares, and to pierce them through with more sorrows? I mean, he's very direct here, and I think about this conceptually.
And if I look at my life in particular, and I heed the call of the Lord to work diligently to save diligently, if I am the one that's putting away those resources that I have, put my hand to the laborer to be able to see the Lord provide in that way. There is a mutual work that as I work and the Lord gives, I am able to set aside those resources.
So there's a wisdom and prudence as I have invested my time and energy and effort to see those resources grow, that if they were just placed in my hands, let's say if I am 35 and I receive $1 million inheritance, that I have not done a day's work to to move towards, it's very different than if I have worked for 30 years to build up $1 million worth of savings.
And so if I am just thrown on that, at what possibility would there be that that would increase my temptation and my snares and to pierce me through with more sorrows. And I think that's the difference between just passing along a significant wealth versus slowly accumulating wealth over your lifetime. Wesley also says in thinking about this, do not leave it an inheritance to them to throw away.
If you have good reason to believe that they would waste what is now in your possession, in gratifying and thereby increasing the desire of the flesh, the desire of the eye, or the pride of life at the peril of theirs in your own soul. Do not set these traps in their way. And I think that again, it's like, what are we doing with this inheritance?
Are we laying traps before our children? And I think if we were to say this in any other circumstance, like, do I want to put Legos all across my children's floor so that when they step out of bed that they step on pokey Legos? No, I don't want to set that trap for them. That's harming them. That's not good for them.
I don't think we think about money in the same context that we think about these other things. Would you set alcohol in an open container in front of your kid at ten years old and say, hey, have a have a drink with me? No, we're not going to put that trap in front of them. Why would we do the same with money?
Because I think at the end of the day, we we oftentimes think that money is inherently neutral. And yes, the dollars in bills are inherently neutral, but what it does to our soul is not neutral. And so I think this is what we need to wrestle with day in and day out. As we think about what how much is enough for my heirs?
Is is putting these resources in their hands actually more of an entrapment to their soul, more than a blessing to them?

Spencer
There's a weight to money and money is the one thing that we come back to time and again that Jesus says, you can't serve God and money. Now, he never contrasts that when he says, well, you can't serve God and say, you know, the temple or God and, your profession. He says, God and money because they're these two and so easily be at odds.
And that's why we've got to come back to this stewardship concept. So I think we come back here to some practical things. We look at the future, and we need to start somewhere to say what, Lord, what what might be a finish line here? And I think these practical questions can help us as we grapple with that number or that trajectory, because we can say, okay, well, if it all came today, you know, is that a good thing?
Because we don't know, maybe we pass away tomorrow and maybe those resources do come today. So we need to really grapple with is that amount going to be inherently problematic if it came today? Secondarily, is there a way that we can bless them gradually, you know, with college tuition, with childcare, a down payment, all these things kind of along the way where we're able to help them also have conversations about stewardship with them. You know, there's all kinds of different ways that we'll get into in our next episode that we can surface those conversations and we can just observe, you know, what changes in their lifestyle. If we gave them an extra $10,000 or $20,000 for Christmas because we had a significant surplus, if that changes, you know, everything that they do in terms of the trips that they take next year and they, you know, go to theme parks, you know, once a quarter and, you know, then that can be a clue that, okay, maybe that's not going to help them grow closer to Jesus. Or maybe it really does. So but that gives us, again, a leading indicator of how they will have the experience of, of walking with the Lord in it.

Austin
Absolutely. And anecdotally, with clients that we see that, do you start doing either these small gifts or accelerated gifts, it really does help them understand, oh, this is how my child would use this. Some of that may be due to immaturity. I mean, if you've got a 20 year old heir, they're not going to use $10,000 in the same way that a 30 year old heir with children under the roof will ideally.
Now they might. But I think seeding those small gifts now really does help illuminate to your family “hey, this is what's actually happening.” This is what son or daughter or grandchild actually values and I think it's really important not just to to give it, but then to watch and observe. Because then it's, it does help you to say, okay, well, these gifts really weren't actually benefiting their soul.
Or maybe, hey, I saw them do this and actually gave abundantly rather than just taking it using themselves. Maybe they pass it along, maybe they use it to bless their children or some other means of using those monies. I think just the question always comes back to. Okay, how are we doing this wisely? How are we walking alongside them?
And I think this is where, again, we'll talk about this in our next episode. But communication really is critical here. And you don't have to say, hey, I'm going to give you a little bit to see how you do with it. And if you do badly, I'm going to take it away. You're not going to get this gift next year if you blow this money this year.
Maybe that's the thought in the back of your mind, but it's saying, hey, we want to bless you with this gift and we want to, you know, there's a lot of ways that you can see it, but say, hey, the Lord has been really generous to us, and we just wanted to be incredibly generous with you this year and just let's celebrate what the Lord has done in our lives to be our provider, because we see ourselves as the stewards, just start having those conversations because the relationship that you have, it is a discipleship, piece here that we really have to walk hand-in-hand with our heirs.

Spencer
And there's has to be an expectation that money brings emotions. Money makes things harder. You know, a lot of the ways, if we don't have these resources, we don't have to have the difficult choice, nor the difficult conversations, nor all of the emotions around this. So there's a stewardship there. It's difficult. We if we enter things and, you know, if you enter a sporting event and you think, oh, these guys are going to be really easy and we'll just walk all over them. Then you're setting yourself up to not do well in that sporting event because you don't know the caliber that you may be facing. So, one of the things that I think we have to come back to is know that there's going to be some challenges in this, and if we approach it in the right way of, you know, I'm going to have to have some difficult conversations, probably.
But this is, a gift that I have that I can make and I can steward. Then we're setting ourselves up much more for success all along the way.

Austin
Yeah, absolutely. I think as we close out today, one of the things that I think about of how do we actually practically set the finish lines for heirs, is it saying, okay, what is that total value that I want to pass along to them? Whether it's a down payment value, maybe you say for each of my kids, I want to give them enough to make a down payment on a median value home in whatever city that they’re living in.
And this could create complexity within an estate plan. But the reality is, if that's what you want to do, let's set that cap in that finish line of saying, okay, it's a down payment of a median house for where 20% of that or whatever amount it is, and you just say once you get there, then maybe you have to write custom beneficiary designations and say, this heir receives 200,000, this heir receives 300,000, this heir receives 100,000. And then all else goes to, donor-advised fund or charitable institution or whatever it is. I think having those things written out of. Okay, I know that I want to give them this amount or to help with this specific piece of life so that, you know, hey, okay, if if I were to pass away tomorrow, if you're in your peak earning years and you wanted to provide that for your children, okay, if you have it, then great.
It passes along. But if not, then you give them what you can.

Spencer
Well, and I think really specifying those pieces can be quite helpful like you're talking about, because it might be there are a number of things. There might be a half dozen things even where you say, okay, it's it's a down payment on a home. It's having enough that they may be able to help with, child care. It could be, that you have, a secondary education.
You know, you want to be able to help with a master's degree. It could be all kinds of different, you know, pieces along the way that you're giving them, resources or making them available over time. And ideally, you're able to do that while you're alive. If you have planned in that way where you say, okay, well, if they start a business, you know, I'd like to be able to help fund, you know, $50,000 as a note that would be, a no-interest note that they could pay back over a handful of years or something like that.
But you've got resources that are already earmarked along that path that you're deploying over time. And the reality is, you know, you get to 60 years old, for your heirs, and maybe you're 90. They may not need that much. You know, hopefully they're at a point where, you know that they they're not looking for those resources because you've helped them to become an excellent steward all along the way.
And having a vision of that for each child, and grandchildren, as well, that might come or other relationships that you have can be really helpful because it can allow you to release those funds during your working years, during your retirement years. You know, if you said, okay, well, I've always wanted to be able to provide $100,000 for each child for a down payment on a home.
Okay? They get ready and boom, you know, those resources go out the door, provided that you've saved, along that path, and then you're not feeling beholden to pass those resources on, when you are, you know, looking at your estate plan.

Austin
Absolutely. Spencer, thanks for talking about financial finish lines for heirs. We recognize that this is an emotionally charged conversation, and next week or next episode is going to be even more so because we're going to talk about how do you actually have those conversations with the heirs. Clients, if you want to talk with us about how to set those financial finish lines for your heirs, we would love to have that conversation as always, leave comments down below and we'll see you again next time. Take care.
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Disclaimer
This content was provided by Second Half Stewardship. We're in Knoxville, Tennessee, and you can visit our website at www.secondhalfstewardship.com. The information in this recording is intended for general, educational and informational purposes only, and should not be construed as investment advisory, financial planning, legal, tax, or other professional advice based on your specific situation. Please consult your professional advisor before taking any action based on its contents.