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."
Some Resources
Print:
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)
Internet:
www.ethicalwill.com
www.personalhistorians.com
www.yourethicalwill.com
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.