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Religious faith can influence estate planning, but should be approached carefully, P.1

Estate planning encompasses a number of goals, including transfer of wealth, asset protection and appointing powers of attorney. Numerous considerations and values go into estate planning , but one aspect that is sometimes given insufficient attention is religious faith. Too often, religious faith is not considered at all, or the way it is considered is not as thoughtful as it could be.

Religious values can have a significant impact on the way some estates are handled, touching on end-of-life heath care, organ donation, funeral and burial/cremation arrangements, distribution of assets among heirs, and charitable bequests.

While religious faith can certainly enrich estate planning, it can also be the source of many contentions. One area where this is especially the case is with the disinheritance of heirs. This frequently appears as a clause in a will which disinherits a child who marries outside of the faith or culture of the parents.

These provisions can be problematic, however, as public policy may prohibit the enforcement of provisions which inappropriately interfere with marriage. If the provision fails it could cause even more expense, embarrassment and ill feelings in the family.

Trusts are a generally better approach to the concerns behind such provisions. Even though they cost more on the front end, the trusts allow for greater flexibility, privacy and less court involvement. In setting up such trusts, one may permit the trustee to make discretionary distributions based on criteria that include religious faith. Selection of a trustee should, as always, be given special consideration. Preferably, it would be someone who shares one’s religious faith.

In our next post, we’ll continue looking at other ways religious faith can affect estate planning.

Source : Wall Street Journal, “Joining Church and Estate ,” Rachel Emma Silverman, April 30, 2012.