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Splitting Heirs
By Ron Blue
 Ron Blue is founder of Ronald Blue & Co., a national financial, estate
and investment counseling firm headquartered in Atlanta, Ga. He delivered this speech
at the annual Generous Giving Conference in Pasadena, Calif., February 28-March 2,
2003.
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The brother in humble circumstances ought to take pride in his high position.
But the one who is rich should take pride in his low position, because he will pass away
like a wild flower. For the sun rises with scorching heat and withers the plant; its blossom
falls and its beauty is destroyed. In the same way, the rich man will fade away even
while he goes about his business.
Blessed is the man who perseveres under trial, because when he has stood the test, he
will receive the crown of life that God has promised to those who love him (James 1:9-
12).
Over my lifetime has been the most affluent time that the world has ever
seen. I have come to believe that wealth in many cases results in bondage because the
more you have, the more options that you have. It is the paradox of prosperity.
When Judy and I first got married during our time at Indiana University, we
lived in a trailer that was about six feet wide and eight feet tall and 28 feet long. You
could sit on the pot, make dinner and do the ironing without moving. Our life was fairly
simple at that point. We didn’t have to decide what clothes we were going to buy, what
cars we were going to buy, where we were going to go on vacation, what we were going to
do for our children’s college education or our retirement. Life was simple because we
had few choices. Thirty-eight years later with five children and six grandchildren, life is
far more complex than we had ever imagined.
Several months ago, we had lunch with Howard and Jean Hendricks, a couple
in their 80s, and asked them if it got any easier. They responded, “It doesn’t get any
easier. It gets harder because the older your kids get, the older your grandkids get, the
bigger their problems are and the less influence you have to solve those problems.”
I was with a board member of Campus Crusade for Christ not too long ago. I
was talking about these things with a man named Clarence Brenneman, who is 94
years old and one of the most vital men I know. He said, “Let me tell you something. I
am back in the business.” When I sounded surprised, he said, “Yeah, your kids just
never leave. They have asked me to come back and help them.” I started doing the
math and realized that if he is 94, his kids have got to be in their 70s and his grandkids
in their 40s and 50s and his great-grandkids in their 20s and his great-great-grandkids
even younger than that. When does it end? It doesn’t end.
Life becomes more complex the older you get and the wealthier you become.
It doesn’t get easier. That is a paradox that we have been led to believe: If I can
accumulate enough, my life will become simple.
John Steinbeck wrote in a letter to Adlai Stevenson that was published in the
January 28, 1960 edition of The Washington Post: “If I wanted to destroy a
nation, I would give it too much, and I would have it on its knees, miserable, greedy,
rich and sick.” He wrote that over 43 years ago. On his 75th birthday, former President
Jimmy Carter commented that the United States has become the stingiest nation in the
world, keeping more than we give despite our blessedness.
A friend of mine asked me whether I had ever seen wealth transferred
successfully to the third or the fourth generation. I couldn’t remember any wealth that
has been transferred successfully to the third and the fourth generation. Let me tell you
what the problem is. If I asked you what was one of the maiden names of your great-
grandmothers (you have four great grandmothers), would you know? I have found that
about 10 to 15 percent of people can come up with one or two of those names. Nobody
can come up with all four maiden names of their great-grandparents. This is significant.
The wealth that is transferred to the second generation typically doesn’t cause a
problem because by the time they get it, they are 40, 50 or 60 years old. They have
already established their lives, and you have raised them. They have also seen the
wealth created. The third generation has not seen it created, and they don’t have any
real perspective or concept of where it came from. The fourth generation absolutely has
no idea where the wealth came from.
There was a book written in 1985 called Rich Kids that is a fascinating
study of what happens when major wealth is transferred to kids—people between the
ages of 20 and 40. They did not know how to handle wealth because they had no idea
where it came from. These people belonged to the third and fourth generations.
Think Like a Steward, Not Like an Owner
Denny Bellesi, a pastor from Orange County, Calif., says, “Don’t think of yourself as an
owner. Think of yourself as a steward.” If you don’t stop and think about that
statement, it is easy to miss the significance of it. Scripture says, “As a man thinketh in
his heart, so he is (Proverbs 23:7, KJV), and, “We take captive every thought to make it
obedient to Christ” (2 Corinthians 10:5b). I have come to the conclusion that what I
think about will determine my belief system, what I believe will always determine my
behavior, and my behavior will ultimately determine my feelings.
Most of the time, we start on the feeling side, the intuitive side. I encourage
you to think about what it means to see yourself as a steward as opposed to an owner.
Your mindset becomes radically different when you think of yourself as a steward.
Biblical stewardship, I believe, is the accomplishment of God-given objectives
using God-given resources. The absolute key to financial freedom is to understand that
God owns it all. If God gave it to me and He has given me direction as to how to use it,
stewardship is using wealth for God’s purposes, God’s plans and God’s objectives. As I
began to think about myself as a manager, money then becomes three things to me: a
tool that God uses in my life and that I can use in other people’s lives, a test and a
testimony to the world. The Bible says,
Every good and perfect gift is from above, coming down from the Father of the
heavenly lights, who does not change like shifting shadows. He chose to give us birth
through the word of truth, that we might be a kind of firstfruits of all he created (James
1:17-18).
We are the first fruits of His creation. What God gives us is ours to steward
and to use for His plans and purposes. Randy Alcorn, an author and former pastor from
Oregon, has talked about giving in secret. Alcorn suggested that all giving should not be
done in secret because we are called to be salt and light. We are called to let our good
works shine before men. How I use money is a tremendous testimony to the world
because the culture tells us one thing while God’s word tells us another.
If you think of money as a tool, you will also begin to think of it differently.
For instance, I once visited a couple. The husband was 61 years old, had just sold his
business for multi-millions, and they were telling me about their lifestyle. They had a
piece of furniture in their bedroom that they had since they had been married. It was
about 40 years old. It was missing one or two drawers, and the wife had been wanting
for years to redo their bedroom, get rid of this piece of furniture, and replace it with
something new that had all the drawers. The husband, being a good steward, had said
that he wasn’t going to redo his bedroom because it was a waste of money. After a
while, I asked the husband, “Would you be willing to spend $1,000 on your wife’s peace
of mind?” He answered, “Well, sure.” I told him to go ahead and buy the new furniture
because money is nothing more than a tool. It is not to be hoarded; it is to be used.
Money is used to accomplish various goals and objectives. Money is never an end in
itself. It is always a tool to be used. Once we die, we no longer have the opportunity to
use it again.
In my opinion, Joseph is the greatest illustration of a steward in the Bible. He
understood that they had seven years of plenty and seven years of famine. He planned
for the seven years of famine in the future by saving during the years of plenty.
Because of his foresight and wisdom, they had enough. He never considered those
resources to be his resources, even though he was a very influential and powerful man.
They always belonged to the Pharaoh and to the nation of Egypt. God would have us
think of ourselves this way.
The decision-making process for transferring wealth to the next generation,
then, begins with a life overview, trying to answer the questions, “How much is enough?”
and “Why am I doing what I am doing?” Note the word “process” in making these
decisions. If you are going to bake a pie, you don’t just throw all of the ingredients
together and hope that it turns out right. You start with a sequence, with a process, and
I want you to think of the decision-making process as akin to baking a pie. Because it is
process, you don’t do step 2 until you have done step 1. You don’t do step 3 until you
have done step 2 and so forth. You have to stay in process to end up with the right
decisions.
Decision 1: Transfer
The first decision you need to make in the wealth-transfer process is transfer. Where
are you going to leave your money? The biblical life overview says that wisdom, like an
inheritance, is a good thing and benefits those who see the sun. Wisdom is a shelter as
money is a shelter, but the advantage of knowledge is that wisdom preserves the life of
its possessor. Money can and does destroy the life of the possessor. Because money
destroys, it is really a good thing to not own the money. Wisdom gives life, and money
does not. Job said, “Naked I came from my mother’s womb and naked I will depart. The
Lord gave and the Lord has taken away. May the name of the Lord be praised. In all
this, Job did not sin by charging God with wrongdoing” (Job 1:21, 22). So, how much do
we leave? We will leave it all. You have never seen a hearse pulling a U-haul.
The decision of transferring your wealth offers three choices: (1) You can give
it to your heirs, (2) you can give it to charity or (3) you can give it to taxes and
expenses. That is it. If you decide to leave to your heirs, you need to leave a dollar for
the government for every dollar that you leave to heirs under today’s estate tax laws.
Planning may help you get around some of these fees, but the tax laws are set up for
approximately a 50 percent tax. Any money that you leave to your heirs will be taxed. If
you leave 100 percent of it to charity, you have no tax on that, whether it is through it a
private foundation or a charitable organization. I think that with the repeal of the estate
tax, we will see giving go up because you will no longer get a tax benefit at death but
while you are living against your ordinary income. So, you only have three options, and
there are three principles that go hand in hand with these three choices.
The first principle is the treasure principle. In his small book The Treasure
Principle: Discovering the
Secret of Joyful Giving, Randy Alcorn teaches that you can’t take it with you, but you
can send it on ahead. God owns it all. Where my treasure is, there will my heart be also
(Matthew 6:19-24).
The second principle is the unity principle: God did not give you a spouse to
frustrate you. Years ago we had an investing principle: If you can’t explain it to your
wife, you don’t understand it well enough to do it. In estate planning, a similar case is
true: If you and your wife don’t have agreement, then you probably shouldn’t go ahead
until you have unity. The problem with the unity principle is that men and women think
differently. I had three daughters, became a Christian, and then had two sons. What I
discovered in raising daughters was that daughters are a lot different from sons. One
time I got so tired of hearing the girls come downstairs for breakfast saying, “My hair
looks terrible today,” that I told them that the first woman in the house who comes to
breakfast saying her hair looks great today would get $100. I never paid. There is a
difference between men and women in the way that they think. The best illustration I’ve
heard of this is one I found on the Internet about a language instructor who was
explaining to her class that in French, nouns, unlike their English counterparts, are
grammatically designated as masculine or feminine. “House” in French is feminine,
and “pencil” in French is masculine. One puzzled student asked, “What gender is the
word ‘computer’?” The teacher did not know, and the word was not in her French
dictionary. For fun, she split the class into two groups by gender, and asked them
if “computer” should be masculine or feminine. Both groups were required to give four
reasons for their recommendations. The men’s group decided that the word should
definitely be feminine because (1) no one but their creator understands their internal
logic, (2) the native language they use to communicate with other computers is
incomprehensible to everyone else, (3) even small mistakes are stored in long-term
memory for possible later retrieval, and (4) as soon as you make a commitment to one
you find yourself spending half your paycheck for accessories for it. Meanwhile, the
women’s group concluded that the word should be masculine because (1) in order to get
their attention you have to turn them on, (2) they have a lot of data but they are still
clueless, (3) they are supposed to help solve problems, but half the time they are the
problem, and (4) as soon as you commit to one, you realize that if you would have
waited a little longer you could have gotten a better model. Men, God did not give you a
spouse to frustrate you. Women, God did not give you a husband to frustrate you. The
two of you can learn to communicate because that is the way God intended for a
marriage to work. The truth is, 80 percent of women will experience widowhood during
their lives, and the average age of the widow is 55. That is a pretty staggering number.
I am 61, and my wife is almost 59, so on the average I have been dead for about four
years. The fact of the matter is that most women will end up managing most of the
wealth that has been created, quite a significant amount of wealth. It is estimated that
between $41 trillion and $136 trillion will change hands over the next 50 years, an
average of $1 trillion to $3 trillion per year. In 80 percent of the cases, the wife is
probably going to be the major decision maker on that wealth transfer.
The third principle is the wisdom principle: Never transfer wealth without
transferring wisdom. If you transfer wealth without transferring wisdom, you are
guaranteed to destroy the person to whom you are transferring the wealth. Ask
yourself “What kind of wisdom do my children demonstrate today?” Three questions will
help you think through this: (1) “What is the worst or the best thing that can happen if I
transfer this wealth to such-and-such?” (2) “How serious is that?” (3) “How likely is that
to occur?” Do this for each child and keep in mind that the answers may change over
time.
I asked these questions to a good friend of mine who is a very wealthy man,
and his answers were as follows: (1) “God’s resources could be wasted.” (2) “That is very
serious.” (3) “This is 100 percent likely to happen.” This man has good children, but he
understands that $100 million passed to somebody who didn’t earn it can do very little
good. He is a godly man with Christian children, but he felt like the transfer of
significant wealth to that second generation would see God’s resources at the very best
delayed for kingdom purposes, and at the very worst destroy his children and never ever
get into kingdom uses. I am not saying that you shouldn’t give to your children. What I
am saying is that you need to think about how to give and why you are giving. Ask
yourself these questions on an ongoing basis.
Judy and I talk about this frequently, and the answers change as time goes on
because circumstances change. Still, we ask “If we leave X, what is going to happen to
our children? How serious is that and how likely is it to occur?”
Decision 2: Treatment
The second decision you need to make in the wealth-transfer process is treatment. You
love your children equally, and as such, you treat them uniquely. We tend to think of
treating our children equally all the time, but I suggest that with five children, I have
five different personalities. How they were all raised in the same household and turned
out so differently, I don’t know. But as such, they should be treated uniquely. As a
matter of fact, to not treat them uniquely is to dishonor them. It is to see them as one
of a group as opposed to seeing each one as a unique individual whom God has created
uniquely. Thus, when you think about transferring, you might start with asking, “What is
the worst thing that can happen if we leave such-and-such?” Then ask if that same
answer applies to each of your children. You might have sons, daughters, grandchildren,
sons-in-law and daughters-in-law. You need to treat your children uniquely with unique
circumstances.
We have one daughter who has gone through a divorce. Her situation is
absolutely different from her two sisters who are married, one to a banker and one to a
vice-president of marketing. We treat them uniquely.
Decision 3: Timing
The third decision you need to make in the wealth-transfer process is timing. You need
to decide to transfer your assets to maximize their use by you, by your heirs and by
kingdom servants. Whether you do it on a current basis or whether you do it on a
deferred basis, you need to ask the question, “What is the best use of the money right
now?” If you are going to transfer significant wealth at a later point to heirs, I suggest
you begin that process right now rather than waiting, which will enable more current
giving. Do your giving while you’re living so you’re knowing where it’s going. While that
may not be proper English, it is a good way to do it. You need give now so that you can
watch and see how your children or your heirs handle it.
Over the years I have learned that you should never use money to manipulate
behavior. When you give money, it is a gift; a gift is given unconditionally. If there are
conditions on the money given, make sure that the recipient knows what the conditions
are. As we give and help our children, whether helping them to buy a car or helping
them with a down payment or a mortgage payment, we find ourselves at some point
saying thinking that because we gave the money, we should have some sort of control.
Then we have to step back and remind ourselves that it was a gift, and it is theirs to use
however they want. I don’t have to give it to them again, but if I am going to transfer
money, I cannot use it to manipulate behavior. I don’t ever want to change their
lifestyles. If I give money to any of my children to change their lifestyle, I have pre-
committed them to a lifestyle that God may not have chosen for them. I have one son
who is also in ministry. If I gave him money for a house or a car, he would then have to
maintain that lifestyle. I don’t want to do that. Nor do I ever want to destroy the need of
my sons-in-laws and my sons to provide. They have that need.
I got a call not too long ago from a father whose daughter was getting
married. Her future husband was in medical school, and he was going to graduate with
$140,000 in school debts. This father could easily afford to write a check for $140,000,
but he asked my advice. Everybody told him not to write the check for $140,000. I told
him, “Absolutely not because he is the one who created the debt.” Not only that, I
discovered that he was going to be an orthopedic surgeon and informed the father that
in about five years the young man would be able to buy his company. In addition, the
husband needed to be able to provide for his family, which included getting out of debt.
Don’t ever come between a husband and a wife with the gifts of money.
Although it should be common sense, it is an easy thing for a parent to do and the
reason why parenting adult children is more difficult than parenting young children. I
now have the resources to do what I want and to help them in any way that I want to
help them, but there is the danger of coming between the husband and the wife.
Similarly, we don’t ever want to come between the parents and the children, and we
don’t ever want to get in God’s way of dealing with our children. God may take them
through financial adversity, not so that I can bail them out, but because He wants to
teach them something. Be careful when you bail your children out. I have seen many
parents take the place of God in people’s lives.
Also, don’t be manipulated by your children relative to their own demands and
expectations. You can never avoid your stewardship responsibility. It is a responsibility
that God gave to you and to you alone. He didn’t give it to them. He gave it to you. You
are the one who is accountable for how you use the resources that He has entrusted to
you. Be careful that you don’t create an expectation with your children that you can’t
meet.
Decision 4: Title
The fourth decision you need to make in the wealth-transfer process is title. What am I
going to transfer, and when am I going to transfer it? This is where the rubber meets
the road. It is when I make the conversion decision and transfer the title. If it is an
amount of money that I give or if it is a business, whenever I transfer that title, it is
done. When you transfer title, it is an irrevocable decision. The IRS says the secret to
transferring is to stop thinking of it as your money. When you have transferred title,
stop thinking of it as your money.
Decision 5: Tools and Techniques
The fifth decision you need to make in the wealth-transfer process is tools and
techniques. Techniques may help you to accomplish your objective, but they themselves
are not the objective. Because they accomplish your objective, if you don’t know your
objectives, the tools and the techniques can’t be used since they are not the objective
themselves. Tax reduction is not the objective. If you want to reduce your taxes, you
can give it all away.
Never use a trust because of a lack of trust. If you are setting up a trust
because you don’t trust the person and their decision-making ability, why are you even
leaving money to their discretion? Why are you transferring money to somebody you
don’t trust?
Decision 6: Talk
The sixth decision you need to make in the wealth-transfer process is talk. This is the
decision that rarely ever happens. Most people begin their planning at decision 5 with
the tools and techniques. But you need to remember that God is not interested in the
amount of money you leave. He is not interested in the resources. He is only interested
in your use of those resources. In making the decision to talk, you avoid creating
a “coping gap” for your children. What do I mean by “coping gap”? The coping gap is
when expectations are different from reality. Your children have the right to generate
any expectation they want unless you help them generate the right expectation.
I facilitated a family conference not too long ago for a father who had started
his own business 50 years before. God had given this man a word out of Scripture, and
he had developed an instrument, a testing instrument right out of Scripture that
revolutionized the way personality testing was done around the world. It had been his
dream. It had been his passion. I asked him about their marketing plan because they
were worldwide, and he said, “We don’t have a marketing plan.” They had never had a
marketing person. Because of the quality of the instrument, it had spread around the
world on its own. He had two daughters, one divorced and one single, and two
grandchildren. While we were sitting in a conference room, I asked the father the
question in front of the children: “Do you trust your daughters?” He and his wife looked
at one another and said, “Yes, we trust them.” Second question: “Who is going to carry
on the vision of the business better than anybody else? Is it a corporate purchaser, or is
it your family?” He responded, “We don’t think anybody but the girls could carry on the
purpose of the business.” I asked them if they wanted to leave the business to the
girls, and they said they did. Then I looked at the girls and asked them if they got
along. We talked through that one a little bit. Then I asked the really critical
question: “Dad, you have decided you are going to transfer the business. Now, girls,
Dad has been dead for five years and IBM comes along and they want to buy this
company for $100 million. What are you going to do?” The younger, unmarried one
said, “Sell it.” She didn’t even hesitate. The second one was shocked by that at first, but
as she thought about it, she said, “I guess for $100 million I would sell it, too.” I asked
their father if he were OK with their decision, and he replied, “I said I trusted them,
didn’t I? Then I have to trust the fact that it was the right decision at the time.” What
makes this conversation so important is that the girls now have the freedom from their
father to do with that company and with the resources in that company whatever God
would direct them to do. Had we not had that conversation, forever in their minds would
be the question, “What would Dad do?” or “What would Mom do?” Through talking, we
established trust and the transfer of the decision-making ability. Now the girls could own
the company and the resources.
Conferences can be an incredibly valuable time that has generational
consequences. A family conference is important, and it is a good idea if you can be
there since it will take place in the attorney’s office at some point, whether or not you’re
still alive. It is a great idea to sit down with your children to create the right kind of
expectations in them. In fact, have many family conferences. Have a formal conference.
If you have great wealth, you may need a facilitator to help you process the planning
and the thinking.
Using God’s Wealth to Accomplish God’s Purposes
For years I have taught that you should love your children equally, treat them uniquely,
and remember that you are using God’s resources when you transfer wealth to the next
generation. If the resources are going to be dissipated, you may want to think about to
whom you are going to leave them.
A couple once heard me say this and decided to disinherit their son because
he had taken up a lifestyle of which they did not approve. In addition to this son, they
had two daughters. They asked my advice before signing the final papers. It was one of
those times when you sense God’s Spirit and realize how tough a question this is. Once
the papers are signed, it is done. They literally transfer the title. Like Nehemiah, I
asked the Lord for help, and I think God gave me some wisdom. I asked them a
question: “If you disinherit him, is he more likely to come into the kingdom because he
knows why you disinherited him, or is he less likely to come into the kingdom?” They
answered that he would be less likely because he already resented their Christian faith.
I asked another question: “If you give him $5 million and he wastes it, do you think
God has $5 million He may want to invest in his soul?” They answered yes.
Don’t presume that not leaving money to your children is the right answer, for
it is not. Your wealth is God’s resource used to accomplish God’s purposes. When you go
through this process, begin to ask yourself these questions. And don’t fail to make
these important decisions.
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