Monday, June 10, 2013

Dave Ramsey's Generational Wealth

The sixth lesson in Dave Ramsey's new class, The Legacy Journey, is about generational wealth.  Dave shows examples of how generational wealth is all over the Bible.  Families are called to be managers of God's resources and that responsibility is transferred with the wealth to your heirs.  Dave explains that wealth is not supposed to be about consumption, so the kids should not be looking at their inheritance as an opportunity to not work or to buy anything they want.  Generational wealth should be used for expanding God's Kingdom.  

Culture teaches us that money is evil and that people with money should leave their inheritance to charity, but this is not what the Bible teaches us.  Proverbs 13:22 states, "A good man leaves an inheritance to his children's children, but wealth of the sinner is stored up in righteousness."  Families are called more often to mange God's money than institutions.  Families that understand that the money that comes to them through work, gifts, or inheritance is to be managed for God will not be ruined by wealth.  While leaving money to charities and non-profits is okay, it does not follow the spirit of scriptures.

So, how do you make sure that the wealth God has called you to manage continues to be managed well?  Teach your children how to handle money as I have written about from previous sessions.  In addition to this, you need to do some estate planning.  This is an important piece to ensuring that you are being a good manager of God's resources.

In your estate planning, you should first make sure that everyone over age 18 has a will.  There is a 100% death rate for humans, so you will die and you need a will! Here are some things you should know about wills:
  • Wills are state-specific, so if you move to another state you will need to redo your will. 
  • Always update your will when major events occur.
  • Married couples could do mirror-imaged wills. 
  • Wills allow families to function in a crisis situation.
  • Make sure you let people know what is in the will while you are alive so there are no surprises after you are gone. 
  • If you have a net-worth or assets over a million dollars, you will want to consult an estate planner.

A few other important things to consider regarding estate planning:
  • Most people do not need a living trust because it is not worth the hassle.
  • Do not deed your home to family members prior to death.  
  • Create a family constitution that will describe who you are as a family.

The final piece of advice that Dave gave in this lesson was creating a legacy box that contains all of your important information in one place.  This is something I am excited about doing for my family.  Creating a legacy box is one way you can communicate your love to your family.  Dave mentioned several things that you should include in your legacy box including the following:
  • An executive summary of what is in the box
  • All financial account records
  • All ownership records (house, cars, etc.)
  • All insurance documents (health, disability, life, etc.)
  • All investment account information (retirement, college, mutual funds, etc.)
  • A financial statement summary (debts/assets) 
  • Contact information for all accounts
  • Your will/estate plan
  • Your funeral plans (you should pre-plan, but not pre-pay)
  • Birth certificates, social security cards, etc.
  • Legacy letters for the future to be read on death or important events

After you create your legacy box you, may want to create an additional copy of all the documents and put them in a safety deposit box. Make sure to show your family everything ahead of time so they understand how to use it and find the information they may need.  You also should update everything on a yearly basis or when major events occur.  

Overall, this was an inspiring lesson about how to ensure that the legacy of your devotion to God is carried on here on Earth even when you are with Him in heaven!

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