Biblical Estate Planning
Article by R. Joseph Ritter, Jr. CFP® EA
Note: This article is geared toward anyone who already has a Last Will and Testament, Trust, Life Insurance, accounts with beneficiary designations, and/or retirement accounts with beneficiary designations that can be modified at will. If you do not have any estate planning documents in place, you can read the article on Last Wills and Testaments first and then refer back to this article.
Who should receive a share of your estate? Should the church or other charitable organization receive a portion of your estate? What is a Biblical inheritance?
The use of a Will or Testament for succession of property and to convey final wishes among family members is not modern. Did you know that there are instances in the Bible of a Will being used? Some of the more popular references to Wills can be read in the following verses:
- Abraham – Genesis 25:5-6
- Jacob – Genesis 48 and 49 (Jacob pronounces blessings and curses on his sons in a form of Testament)
- David – 1 Kings 2:1-9 (David gives final instructions to his son)
- Jehoshaphat – 2 Chronicles 21:3
- A Will may not be annulled – Galatians 3:15
- A Will is effective only after death – Hebrews 9:16-17
The use of a Will is not only Biblical but also ensures that your intentions are carried out and the people who are to receive an inheritance actually get it. Plus, the Bible has certain ordinances on inheritance that should inform the decisions of those who call themselves Christians.Old Testament Law of InheritanceThe Old Testament of the Bible refers to several concepts of estate succession, including per capita, birthright, and a law of inheritance.
The per capita division of an inheritance is discussed in Numbers 26:52-56. Essentially, each person receives a share of the inheritance, and some family groups may receive a larger portion of the estate than others if one family group was larger than another. However, because each descendant receives a share, it is the most equal way of dividing an estate. This ordinance came from God directly and gives us a glimpse into His mind and desires for our lives.
A birthright is the entitlement of the firstborn son to receive a double share and is explained in Deuteronomy 21:15-17. The birthright is not commonly used any longer in the United States and is not generally recognized in laws of intestacy (dying without a Will). Deuteronomy 21:15-17 raise another topic which is disinheriting a child. Some people do wish to disinherit specific people from their estate plan, and it is their right to do so. However, in the Old Testament understanding of disinheritance, a child who was disinherited was literally cut-off from the family. Disinheriting a child did not mean the child still had a meaningful relationship with his father.
Some rather notable instances of children being disinherited include Ishmael son of Abraham and Abraham’s sons of his concubines.
The Old Testament law of inheritance is defined in Numbers 27:8-11 and Ezekiel 46:16-18. Women did not have property rights in the Old Testament, and the male figure was always to receive the inheritance. It was the obligation of the men to provide for their wives and daughters For this reason, widows and orphans were left destitute. In God’s system, however, the widows and orphans were not to be left penniless, homeless and hungry. Their care was to be shared by everyone in the community, so that they had no lack. God often reprimanded people in the Old Testament for taking advantage of the widows and orphans and for failing to provide for them.
God’s system is one that works very well when everyone works together. Once people become greedy and covetous, the people whom society is obligated to protect are overlooked and forgotten. It is very much a natural order of things in the world.
The Old Testament law of inheritance provided for the estate to remain within the family group. If a man died with no sons, only then were his daughters to receive his inheritance. If he had no children, then the inheritance was to go to his ancestors and their relatives. In Ezekiel 46:16-18, God was specifically delivering His law which He expected people on earth follow when He gave the ordinance that any inheritance given outside the family was to revert back to the family.
The Old Testament understanding of an inheritance is that an inheritance is a right of succession possessed by people by virtue of their position in the family. These rights include birthright, the right of sons to receive a share, the right of daughters to receive a share if there were no sons, and the right of adopted children to receive a share. There is also the right of the property owner to express generosity, however, there were often strings attached. Generosity to illegitimate children meant disinheritance, and generosity outside the family unit was not a permanent gift.
A Biblical inheritance is also expressly tied to obedience, which can best be seen in the interaction between God and His people, and a lack of conformity to God’s ordinances could jeopardize one’s right of succession. Although some of the ordinances in the Old Testament seem rather barbaric to us in what we believe to be a modern, informed society, there were specific reasons for those ordinances, and I am afraid we have lost sight of the underlying meaning and purpose the ordinances were intended to play in society.Inheritance in the New TestamentThe focus of inheritances in the New Testament shifts away from establishing God’s design for us and looks instead at the inheritance we can have in God’s kingdom. Through Jesus Christ and our acceptance of the salvation He offers, we are adopted as His children. Jesus is the object of God’s bounty, and through Jesus we can be made heirs to share in His heavenly inheritance.
We can be disinherited through lack of conformity, and the inheritance is to remain within the family group. We must be grafted into the family to receive an inheritance, and as long as we remain in the family, we have equal rights as adopted children. Women were elevated to equal status with men, and fathers and husbands no longer represented the family unit. Each individual in a family unit has his or her own separate right to inheritance or disinheritance. This is the concept of personal responsibility and accountability to God.
Developing a Biblical Estate Plan
The system God designed and intended we use in succession of property is to retain our property and property rights within our own family groups. The Biblical distribution of inheritance is per capita whereby each descendant in the group specified receives an equal share. If your Will provides that all living children and grandchildren are to receive a share of your estate, per capita, then they would each receive an equal share in your estate.
Per stirpes, another form of division, is used to provide for division by representation and often results in some family remembers receiving less of a share than others. By way of example, if your Will provides for division among your descendants, per stirpes, you had three children, and one of your children predeceased you, then your estate would be divided into thirds, and the third divided for your predeceased child would be further divided among that child’s descendants, per stirpes. Thus, those grandchildren would receive a fraction smaller than one-third.
The right of the family members in an older generation to represent the younger generations was eliminated through Jesus. The man no longer represents his wife, daughters and children. The patriarch no longer represents the family before God and before the priest. The priest no longer represents the people before God. Through Jesus, we have direct access and accountability to God and, thus, are entitled to share equally in the heavenly inheritance.
Your spouse, children and other descendants are to be the object of your bounty first before anyone else. If you do not have children or other descendants, then and only then would you leave your estate to your siblings, parents or relatives of your parents.
Gifts intended for people outside your family unit would be held in trust with the remainder of the trust to revert back to your family unit at some specified point in the future. It is completely understandable, if you have means, that you want to help an aunt, uncle, sibling or other family member who is less fortunate than you. This should by no means be read to discourage you from doing so. A Biblical estate plan would, however, place the inheritance intended for that person in trust with the remainder to revert back to your family unit. The trust can be designed to provide them with income, level distributions or other forms of distributions that would provide for their needs and preserve the remainder for your own family unit.
Alternatives to Disinheritance
Likewise, instead of disinheriting a child or other descendant permanently, consider that they may have a reversal of fortune after you are gone or that creating incentives for them to receive distributions may result in positive changes in their lives. A common reason for a parent to disinherit a child is because the child has had good fortune in his or her life and other children have not. Thus, the parent wants the other children to have larger shares. What happens if the fortunate child loses his or her fortune (for whatever reason) and winds up needing the inheritance? The disinheritance is now permanent, and the less fortunate children probably consumed the majority of what you left them.
An outright inheritance to a more wealthy child can also facilitate their generosity in sharing their wealth with those in need. A trustworthy child will take care of his or her less fortunate siblings without the oversight and expense of a Trustee to administer a Trust. However, the inheritance could be held for his or her lifetime with distributions only to be made if his or her income or assets falls below a certain level or if he or she falls on hard times. If income is not distributed in a calendar year, then it can be distributed to your other children to benefit them.
Many people also disinherit a child who has not measured up and is addicted to drugs or gambling, embarked on a crime spree, or engaged in a lifestyle not agreeable to the parents. He or she could benefit from an incentive trust. Distributions from an incentive trust would be made if and only if he or she achieves certain milestones, such as drug and alcohol free for a set period of time or demonstrated improvement of character. Distributions would stop if the child relapsed, thus, the incentive trust involves continuous monitoring by the Trustee. A disinheritance would completely discourage the child from ever changing his or her character, whereas an incentive trust leaves room for (and encourages) future improvement. This is a much more God-honoring approach than simply hoping everyone does the right thing after you’re gone.
However, an incentive trust should not be used as a tool to coerce a child into obedience or to “legislate” Christianity into the child’s heart. Incentives should be objective and measurable, not moral or religious ideals.
Bequests to Your Church or Favorite Charity
Following the Biblical model, gifts to the church and charitable organizations should also be held in trust. Ezekiel 46:16-18 provides for property to revert back to the family unit when it is gifted by inheritance. In other words, such a gift should not be permanent. During your lifetime, you have an obligation of stewardship to support the church and share in the support of people on the margins and fringes of society. This is one of your duties to practice while you are alive. It is a test of your allegiance to God, an expression of your love for God, and a commitment to conform to the ordinances of God. This is not something that can be fulfilled after you die by making a bequest in your Will. Establishing a pattern of stewardship and then leaving your estate to your children and descendants transfers the duty and ability of stewardship to them. Combined with an expression in your Will of your final instructions and wishes for your family, such as used by Jacob and King David, your family can be afforded the opportunity to develop their own pattern of stewardship to be passed to their children and descendants.
Not only will your family collectively make a greater impact on the world, you will have modeled a more Biblical approach to transferring your property and proactively pointed your family toward Jesus Christ.
If you do want to benefit your church or a charitable organization in your Will, a God-honoring method is to establish a Charitable Lead Trust. When establishing the Charitable Lead Trust, you transfer income-producing assets into the Trust, and the Trust pays out income to a church or charitable organization for a period of years. You can also qualify for a deduction for income tax purposes. On the expiration of the time period specified in the Trust, the remaining assets pass to members of your family unit, such as your spouse, children or other descendants. In this way, you continue building a pattern of stewardship for your family to follow and give them the future ability to build their own pattern of stewardship.
A gift of life insurance is also an option. The gift would not benefit the church or charitable organization immediately but would qualify you for an income or gift tax deduction now and bestow a lump sum benefit on the organization at some point in the future without removing a significant portion of assets from your estate away from your family.
A review of your estate plan, the documents needed to implement your intentions, and the assets available to fund your estate plan should be conducted with your attorney or financial planner. We are not attorneys, so we can provide suggestions or recommendations to implement but cannot draft any documents for you or provide legal advice. Any tax deductions you intend to take should also be discussed with the tax return preparer or other qualified tax professional.