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Individuals and Families with Complex Estates (Page 4)

Ways to Transfer Stewardship

It was once true that a will covers the entire estate transfer at death. Today, however, assets transfer through a combination of ways. The most common combination is the will (or trust) plus beneficiary designations.

Wills

A will is a legal document that provides instructions for the distribution of your estate once the Lord calls you home. The will addresses things like guardianship of dependents, payment of final expenses, division of assets among your heirs, and naming an executor to facilitate these processes. Wills are subject to probate, which is the legal process of proving or validating the will and administering its instructions. This process is a matter of public record and can be lengthy, so there are two primary ways to avoid this: revocable living trusts and beneficiary designations.

Revocable Living Trusts

A revocable living trust (RLT), as the name suggests, is a trust that is established while you are living and is completely revocable. An RLT controls your assets while you are living and provides instructions for the disposition or distribution of those assets once you pass away. Since an RLT controls assets during your lifetime, it needs to be funded by transferring titling and ownership of things like your home and bank accounts to the trust, with you managing these assets as a trustee. Since the RLT is a private legal contract, upon your passing there is no court involvement or probate, and the distribution and termination of the trust is not a matter of public record.

If you opt for an RLT, you will also create a pour-over will. A pour-over will transfers assets that are not titled in the name of the trust into the trust. Of course, your pour-over will is subject to probate, so you aren’t avoiding that process entirely. Whether you opt for a will or a trust, you can leverage your beneficiary designations to help reduce probate.

Beneficiary Designations

Beneficiary statements are considered a legal contract and are commonly used by financial institutions to transfer assets when we pass away. This means the asset is passing outside of your will and is, therefore, not subject to probate. Similar transfer arrangements are Payable on Death (POD), Transfer on Death (TOD), and Totten Trusts.

Currently, more than half of the states within the United States have Beneficiary Deeds, also known as Transfer on Death Deeds. This means you can name someone as the beneficiary of real estate, like your home, and avoid probate by doing so. This can be a great planning tool for some families.

Beneficiary statements must properly coordinate with your will or revocable living trust. Since assets with beneficiary statements are passing outside of your other estate documents, you want to ensure that the sum of all things being transferred to your heirs and ministries line up with your overall estate planning goals. Verify the primary and secondary beneficiaries on your accounts and make changes as necessary. By adding beneficiary designations on as many assets as possible, your will would only control things like personal property and physical cash in your home, likely making probate quicker and easier.

Next Step: Estate Documents for a Complete Plan

Click the button to learn about the other documents in a comprehensive estate plan.

  • "You should have two financial goals in life: to make a little money first, and then to make a little money last."

    Unknown

  • "If we command our wealth, we shall be rich and free; if our wealth commands us, we are poor, indeed. We are bought by the enemy with the treasure in our own coffers."

    Edmund Burke

  • "Every man ought to have money on his mind. No man ought to have money on his heart."

    Anonymous

  • "How much better it is to get wisdom than gold! And to get understanding is to be chosen above silver."

    Proverbs 16:16

  • "The plans of the diligent lead surely to advantage, but everyone who is hasty comes surly to poverty."

    Proverbs 21:5

  • "Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth."

    Ecclesiastes 11:2

  • "Almost any man knows how to earn money, but not one in a million knows how to spend it."

    Henry David Thoreau

  • "We are not to jude thrift soley by the test of saving or spending. If one spends what he should prudently save, that certainly is to be deplored. But if one saves what he should prudently spend, that is not necessarily to be commended. A wise balance between the two is the desired end."

    Owen D. Young

  • "There's no reason to be the richest man in the cemetery. You can't do any business from there."

    Colonel Sanders

  • "A good man leaves an inheritance to his children's children, and the wealth of the sinner has stored up for the righteous."

    Proverbs 13:22

  • "Planning one's finances must take place under the sovereignty of God, recognizing His omnipotence, wisdom, purposes, and plans."

    Ron Blue

  • "If a person gets his attitude toward money straight, it will help straighten out almost every other area of his life."

    Billy Graham

  • "God can have our money and not have our hearts, but He cannot have our hearts without having our money."

    R. Kent Hughes

  • "Command them to do good, to be rich in good deeds, and to be generous and willing to share."

    I Timothy 6:18

  • "Ultimately, financial planning is the predetermined use of financial resources in order to accomplish certain goals and objectives. The difference in financial planning between the Christian and the non-Christian is the belief as to whom the financial resources belong and the source of the goals and objectives."

    Ron Blue

  • "…every spending decision is a spiritual decision"

    Ron Blue

  • "Stewardship is the use of God-given resources for the accomplishment of God-given goals."

    Ron Blue

  • "A wise man should have money in his head, but not in his heart."

    Jonathan Swift

  • "Make all you can, save all you can, give all you can."

    John Wesley

  • "A man's treatment of money is the most decisive test of his character - how he makes it and how he spends it."

    Moffat

  • "Financial planning is allocating limited financial resources among unlimited alternatives."

    Ron Blue