Ethical Wills for Multigenerational Planning
Simple, Beautiful, Valuable. How an Ancient Practice Can Work for Multigenerational Planning
The first written ethical wills date to the 12th century, when Jewish fathers wrote to their sons on how to live an ethical life. These writings were an obligation as a parent, and included both practical advice and timeless words of wisdom – “Don’t quarrel, don’t oppress others in money or word, instruct your children as I have instructed you.”
Today, with a growing awareness that a legacy is far more than material goods or financial assets, ethical wills can be part family history, part love letter and part self-reflective exercise. Traditional wills involve what you want your loved ones to have; ethical wills involve what you want them to know.
A non-binding document that should complement traditional legal estate planning documents, an ethical will is by its nature a “spiritual” exercise. An ethical will can be applied in almost any family context when one generation wants to ask, and answer, the big questions: What have I been about? Who were the most influential people in my life? What is the greatest lesson I’ve learned—and want to pass on? Whose forgiveness do I need—and who needs mine? Most critically, an ethical will is an opportunity to put money in a very personal context as a loving expression that gives meaning to the values associated with financial assets that we want the generations that follow us to know.
Most often written for children, grandchildren, or unborn heirs by one person or by a couple, it can be as simple as a one-page “love letter” or can be an audio or video recording. Many people create theirs at certain life transition points or to mark an occasion—the golden wedding anniversary, an 80th birthday, a child’s college graduation—but it should be regularly revisited. Beyond its benefit as an exercise in self-reflection, an ethical will can be used by parents or grandparents to open a discussion on the other estate planning documents, or illustrate what is in their hearts to help heirs better understand their values about money. Even adult children need a comprehensive discussion of the will, trusts, and philanthropic vehicles in order to understand their parents’ intent.
Guardianship documents are an ethical will’s sister documents, and the letter of guidance for trustees, giving voice to a person’s wishes whom the trustee may not have known intimately and providing clarity even to trustees who have a close relationship. The expression of donor intent is another companion piece to an ethical will, used by those establishing a charitable bequest or family foundation.
It’s important that the language in an ethical will be affirming—even if the intent is to communicate to a child why he or she may not be granted access to, or make decisions on assets, and can also include a parent acknowledging mistakes. As important as the values and meaning in an ethical will are to the family’s history and heritage, grandparents often fret over sounding like they’re lecturing when they want to discuss their values with grandchildren. An ethical will is a way to personally, and naturally get points across about where a family came from and where they want to go - truly broadening the definition of a family’s “True Wealth.”
Greg Hammond, CFP®, CPA is a wealth impact strategist who works with individuals, families, closely‐held and family‐owned businesses, helping them grow and preserve wealth, plan for retirement and manage their charitable giving. He may be reached at 1-800-416-1655 or firstname.lastname@example.org for guidance on the transfer of wealth to the next generation.