In order to help people move from “Success to Significance” we have developed an approach to life and estate planning that is called “Values Based Planning”, which is a way to organize a family’s financial affairs so that they can provide adequately for their family, serve others personally and with their finances and encourage and enable family members to do the same.
The Wall Street Journal reports that, “seven out of ten people who die this year will not have a will or estate plan”. Many have not done their planning because they do not want to face their mortality. For them, estate planning is viewed as “death planning”. Values based planning is not just about estate planning that directs what happens at death, but it is about life planning for significance, where death is simply one of the contingencies for which you plan.
Below is a diagram of the VALUES BASED PLANNING process showing the six areas of planning to consider:
At Success 2 Significance, our primary goal is to help you put your estate and financial affairs in order with a comprehensive Values Based Planning process.
This process will allow you to do what you’ve been called to do in a way that is honoring to God, respectful of your family, and personally rewarding.
The purpose for your life is filtered through your personal values. Milton Rokeach, a sociologist, has opined that all people have the same seventeen basic personal values, the differences between people comes in the way that each person prioritizes the values. In addition, there are several different ways that people process information and like to operate in daily life. These are referred to as operational methods. Though the six planning objectives are the same for everyone, the personal applications may vary significantly based not only on individual circumstances, but also on personal values and preferred operational methods. What follows is an overview of the six planning objectives:
1. Put Your House In Order.
Most people do not want to give up control of their lives and wealth by signing documentation that makes them unnecessarily dependent upon other people.
The reality of life is that as we age, maintaining control in all areas of our lives is a continual battle. We all started life completely dependent in diapers and some of us will end life that way as well. Proper planning should allow a family to make adjustments in their affairs as their circumstances change, without red tape or outside approval from others. Control is a central concept in understanding stewardship and a critical aspect that we must resolve in order to age gracefully.
We have found that the best way to begin the process of putting your house in order is through what we call the “evangelism explosion” version of estate planning. “If you knew that you and your spouse were going to die next week what would you do? How would you want your estate distributed?” By first focusing attention on the present, you should be able to get a basic plan in place in case of disaster. This is a beginning point not an ending, but it will free you up to move to the next stage. Then you can take time to review different techniques and opportunities which can enhance and improve your basic plan. We have prepared an Estate Planning Workbook which discusses the basic elements of an estate plan and an Estate Planning Inventory that helps people gather the information necessary to get their estate documents drafted. Below are some additional forms and information that can be accessed from our Resource Page that can help you with this process.
If your plan calls for using some of the creative charitable planning techniques that the law allows, Joy to the World Foundation helps families manage complex assets with trust and administration services. The management of complex assets that are dedicated to charity requires a special understanding of charitable tax law and the benefits that are available to families that dedicate these assets to charity. A Trustee or Administrator that is experienced in charitable tax law and nonprofit organizations can mean more money to the family, more money to charity and less money paid in taxes. There are several types of entities that can be used to manage these assets such as charitable remainder trusts, charitable lead trusts, supporting organizations, Ministers Retirement Accounts, private foundations and charitable LLCs. You can see more about these in the Living Generously section of the website. The vehicle of choice depends on your objectives and Joy To The World Foundation can help you with the decision making. The Foundation can serve as either Trustee of your charitable trusts or administrator of your private foundation or other charitable entity.
2. Plan For Your Future.
There are two primary things to consider as you plan for your future. 1) How can you change your life to bring in more in line with your values and then 2) how can you plan to have adequate cash flow for your family through all stages of life.
If you want to change your life and your world, many people start by answering these five basic questions:
Is God Calling me?
What does God want me to do?
How do I turn my vision into reality?
Who is there to help me?
How should I manage my life?
For more information on this subject read How to Change Your World.
Cashflow planning is usually an important concern for family security. Planning often involves establishing protected income streams, funding retirement plans and building “separate estates”. Our security rests completely in God, but just as Joseph in the Old Testament planned in the productive times to cover the lean times in Egypt, responsible planning helps us prepare for the tough times so that we can continue to be productive though all stages of our lives. For more information on this, read Planning for Family Cashflow Needs.
3. Plan Appropriately for Family Members
Many people realize the dangers of merely passing on large amounts of money to children and other family members. Your wealth should be used to encourage and enable other family members to live productive, meaningful and Godly lives filled with self-esteem and confidence. What is appropriate for one child may be destructive for another. How can you structure “opportunities” as opposed to “entitlements” for your children? Just as it takes planning and care to cultivate both plants and financial assets it takes planning and care to cultivate people and the rewards are far more significant. Read more on Children and your estate here.
4. End of Life Planning
Taxes at death are voluntary taxes, you either do your planning during life or your family pays the taxes at death. Without proper planning there can also be unnecessary expenses and delays at death which can also be extremely difficult for heirs. With proper planning, the taxes, expenses and delays can be significantly reduced or eliminated. This not so much something we do for ourselves, but it is a gift that we give our families. Use the links below to get started with your end of life planning! These links can also be found on our Resource Page.
5. To Reduce Current Taxes
Income tax is the single largest annual expenditure for most affluent families. The super affluent usually got to that position by being masters at minimizing their realized income. Planning involves redirecting income into instruments that change its tax nature, deferring the recognition of the income until a later date or utilizing charitable giving techniques to mitigate the taxes. As Judge Learned Hand proclaimed, "Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is nothing sinister in so arranging affairs as to keep taxes as low as possible, for nobody owes any public duty to pay more than the law demands." To read more visit the Resource Page to download these forms.
6. Living a Generous Life
The main focus of Values Based Planning is to organize your affairs so that you can direct as much time, treasure and talent as possible to the important causes that God lays on your heart. Involvement in the Kingdom is not a spectator sport it is an all of life commitment that you make in all areas of your life to Him and a value that you want to pass on to your children. Generosity is not just giving money away, but it is sharing your time and your talent as well. It is finding ways to serve others. For more information on living a generous life, use the links below.