Ethical wills incorporate a new concept: sharing values and principles.
These days, it's not so much how much money you give
but why. One concept gaining momentum among financial advisors is
ethical wills. They're not designed to take the place of the familiar
"last will and testament" or a "living will," which contains
instructions for how you want to be treated medically at the end of
your days. Rather, they are written documents that preserve clients'
values for future generations in the form of statements of their
principles and beliefs.
Ethical wills are a way to share these beliefs and memories with heirs and friends, though finally they're not legally binding. But for those who care about making their values and ethics part of their legacy, they can be a valuable tool. "You can share your values, hopes, life's lessons, loves and forgiveness with your family and community," explains Barry K. Baines, author of "Ethical Wills: Putting Your Values on Paper," (Da Capo Press Lifelong Books), a primer on the subject written after his own father outlined his values in a letter shortly before he died of lung cancer in 1990. "You can honor the past, capture the present and inform the future."
Barbara Culver, a financial advisor in Cincinnati, says she has 50 to 60 clients engaged at any one time in the ethical will process. "Clients tell me they love the experience, that it's different, they've never done anything like this before, and it's helped them focus on what's really important." Kathleen M. Rehl, a financial planner in Land O'Lakes, Fla., many of whose clients are members of the clergy, says, "I believe for those who take the time to reflect on their past this can be a very positive spiritual experience."
Ethical Wills For Planning Purposes
Indeed, planners like Culver and Rehl are focusing on clients' issues for planning purposes and helping them create ethical wills. While exact figures aren't available for how many people are writing ethical wills, it's clearly on the rise, based on increased Web activity and sales of ethical will resources.
Ken Wheeler, a tax and estate planning attorney in Winter Park, Fla., says writing an ethical will-or as he likes to call it, a "values and vision statement"-affords clients "an opportunity to leave an intellectual, spiritual or cultural legacy that can influence, guide and inspire future generations of family members. They can achieve a sense of immortality."
According to Susan Turnbull, founder of www.Yourethicalwill.com and principal of Personal Legacy Advisors, an advisory firm based in Boston, there are no rules as to length. An ethical will can be a personal legacy letter; length can be anything from one to a couple of hundred pages, she says. Often it can provide a personal history (a series of important stories rather than a dry list of events), messages to your clients' family, friends and community about the values and feelings they want them to carry on, information about where the money they're passing on comes from, and their hopes for what it can accomplish. "I like to think of it as a container for the information and messages that one feels should never go unsaid," says Turnbull.
If clients have trouble, she says, they can speak their thoughts into a tape recorder as if they're talking to a friend or child. Turnbull also has a guidebook available on her Web site on how to create an ethical will specifically designed for clients of financial and legal advisors.
As a concept, ethical wills are not new. They were very likely an inherent part of preliterate societies, and as such, were transmitted orally. The first written reference to ethical wills occurs in both the Hebrew and Christian Bibles. Examples are Genesis, Chapter 49, and John, Chapters 15-18. Over time, they evolved into written documents. While ethical wills were traditionally shared after death, along with the reading of an individual's last will and testament, today they are more commonly shared during the life of the author.
Why Create One?
Baines says people are inclined to write an ethical will when facing a challenging event, a turning point or some transition in life. Some examples are facing the loss of a loved one, birth of a grandchild, expectant parents, becoming an empty-nester, and middle age and beyond, or facing the end of life. While getting together with your family and community, these occasions could also provide the opportunity to share your ethical will by telling your stories.
Stuart C. Bear, an estate planning and elder law attorney in the Minneapolis-St. Paul area, says, "When I am assisting clients with estate planning by establishing wills and trusts, some are interested in more than just effectively transferring assets. They desire to provide guidance to their children by sharing their own personal story and knowledge gained in life through their experiences. If the children are younger, they might want to provide instruction to their fiduciaries and appointed guardians in terms of the raising of their children and parenting as well as monetary values."
Pros And Cons
The advantage of an ethical will is that clients have an opportunity to have an influence on future generations, say planners who engage clients in the process. Through the process of writing an ethical will the writer can gain self-knowledge and come to the understanding what's most important to them, says Wheeler. This is valuable information not only for their families but their professional advisors as well, he says.
Another pro is that it is a private document. Unlike a will, which if it is admitted to probate will become a matter of public record, an ethical will is a private communication and will not be made public unless the author so desires. A disadvantage of an ethical will is that it is not enforceable in a court of law. Those who want to provide specific instructions, which are to be carried out and enforced by a court of law, would be best to put the instructions in their will or trust.
How Is One Set Up?
The hardest part of writing an ethical will is how to begin. There are three basic ways to write an ethical will. You can begin with an outline and list of suggestions. This is by far the easiest way to get started. Once you've created a rough draft, you can review and personalize it as much as you wish. You can also begin with guided writing exercises. Examples that Baines offers in his Ethical Wills Workshop Facilitators Network (www.ethicalwill.com) are: "From my grandparents, I learned ... ," "From my parents, I learned ...," "From experience I learned ...," "I am most grateful for... ."
The third way is to begin with a blank sheet of paper. Write down whatever is relevant about your thoughts, experiences and feelings. This is an open-ended approach. Eventually, themes will emerge from which you can create a comfortable structure for your ethical will. For one-on-one help, an organization like the Association of Personal Historians (www.personalhistorians.org) can be of assistance as well.
Culver says she has a regular format she follows with clients, but "I'm not necessarily present when they write the will. When they complete the will, they send it to me. If there's a couple with whom we're working we compare 'his' to 'hers,' and watch for what's in common and what is different. We use that as a basis for a conversation in our next interview with the client. When they come in, each person reads both ethical wills, and then we facilitate a discussion about what stood out for us in common and what was different."
Culver uses this as a springboard into the next phase, a client retreat, where the couple has an opportunity to explore in much greater detail their values and guiding life principles they want to pass on. Culver says the writing, the review, and the discussion of the ethical are part of her fee-based planning process.
Clients of Rehl have told her they believe their heirs "will probably remember them more for what they say in their ethical wills than through the 'stuff' they leave behind in their legal wills," and "They've had more fun focusing on their ethical wills." Her clients have shared ethical wills with family and loved ones earlier rather, than at their death. After one client, for example, wrote her ethical will and shared it with her daughter, the daughter was so moved she went through the same process with her daughter. "My client said it was a very positive experience, as it gave her time to reflect on so many fond memories of the past," says Rehl.
Bear says one client who has written an ethical will is a couple in their mid-forties, with teenage children. "They are leaving their assets in trust to provide certain opportunities to their children. They are also appointing a guardian for their children, to be charged with raising a child, until the child reaches age 18. This client, through their ethical will, is providing their story, their life lessons to their children to have a lasting record as to the parents' story and the matters in life the parents found most important. They also may want to provide instruction to their fiduciaries in terms of raising their children and their monetary, as well as parenting values."
How receptive are clients to the process? Some not at all, says Bear. Some clients readily bring the subject up on their own, he says, while with others he needs to point out the benefits and opportunities of an ethical will.
"You can use an ethical will to have your clients share with children and grandchildren their hopes, expectations, and dream for them as individuals and as a family," says Wheeler. "They can tell them how they feel about certain values, traditions and behaviors and explain why they feel the way they do. It adds another dimension to their legacy."
Ethical Wills: Putting Your Values on Paper, by Barry K. Baines, MD, 2nd Edition (Da Capo Press, 2006)
Women's Lives, Women's Legacies: Passing Your Beliefs and Blessings to Future Generations, by Rachael Freed (Fairview Press, 2003)
The Wealth of Your Life: A Step-by-Step Guide for Creating Your Ethical Will by Susan Turnbull (Benedict Press, 2005, $19.95)
Bruce W. Fraser, a financial writer
in New York, was a commissioning editor for the book Sixty Things To Do
When You Turn Sixty. For more information, visit www.bwfraser.com/home.