The typical estate plan is a collection of legal documents with sterile discussions of trusts and property distributions. It need not be that way. Your estate plan and your legacy can be enhanced by adding to your plan documents that are more personalized and speak directly to your loved ones.
Certainly the main focus of an estate plan should be ensuring that your estate is transferred in the most efficient and economical way to those you desire to have it. The assets you worked a lifetime to build should be used to achieve your final goals and wishes. After that work is completed, however, there is more you can leave to loved ones.
I long have advocated the use of an instruction letter to your executor and loved ones. This letter is a non-binding expression of wishes and instructions. At its best, it is more than a letter. It is a notebook with several different documents.
It lists your key advisors, the location of important documents and property, and gives advice about how to handle certain assets. The advice is particularly important with specialized assets such as businesses, real estate, and collectibles. The instruction letter also contains personal wishes, such as burial and memorial service instructions.
If there is anything unusual or unexpected in the estate plan, the instruction letter can explain this. For example, children might receive unequal shares of the estate or someone outside the family (including a charity) might receive a portion of the estate. This letter is a good opportunity to explain your reasoning in non-legal language. That can soothe hurt feelings, answer questions, and prevent long-term problems for the estate and the family.
The instruction letter is the best gift to leave your heirs, as I have long stated. More and more estate planners are encouraging their clients to add one to their plans and are providing model forms or sample questions to guide the letter writing. Some call it the family love letter. The letter saves time and money, eases the burden at a stressful time, and helps ensure the estate is administered according to your wishes. More details about the instruction letter are in the Estate Watch section of the Archive on the web site and also in my report, The New Rules of Estate Planning (available for $29 by calling 800-552-1152).
An estate plan can be further enhanced and personalized by taking another step and using a tool that is growing in popularity. The tool is known as the ethical will. This document also is not legally binding. It is addressed to family members and perhaps other loved ones. The ethical will is directed at fewer practical issues than the instruction letter; it is more philosophical.
The ethical will springs from Jewish tradition. In the Bible, there are some unwritten ethical wills. Jacob on his deathbed gathered his sons around him. He described the qualities of most of them and told each what life held for him and his children. (Genesis, Chapter 49) You probably cannot predict the future as precisely as Jacob did, but you can give the children some life lessons.
David met with Solomon to impart detailed instructions about how Solomon should live. He began with broad philosophical issues: So be strong, show yourself a man, and observe what the Lord your God requires. Then, he moved on to very specific instructions about how Solomon should deal with certain individuals. (1 Kings, Chapter Two)
There are other examples of ethical wills in Hebrew literature outside the Bible.
The ethical will is for passing one’s personal and family history, wisdom, and life lessons to loved ones. Usually it is addressed to the immediate family. But some people have written ethical wills to be read at their funerals or memorial services. The document is not supposed to focus on death or other negative topics. Instead, it is meant to be uplifting, instructional, and at times humorous.
The bottom line of an ethical will is to make sure your children or other loved ones know what really mattered to you or what you wanted for them. Often, discussions about these matters never occur in families or get lost among the other discussions and activities of busy lives.
An ethical will can be fairly simple. A father might encourage his children to visit and call their mother regularly and look after her needs. Or a parent might explain why special attention was directed at the needs of one of the siblings and encourage the others to continue that practice. Some ethical wills encourage youngsters to continue in the parents’ faith and raise their children in that faith.
Typically the ethical will is a separate document. But it can be incorporated into or even be the regular will. The classic example of this probably was Jack Kelly, best known as actress Grace Kelly’s father but also a successful contractor. Kelly decided to write the will himself in his own style and integrate instructions about his property with observations about life. Consider a few excerpts:
“I want you all to understand that U.S. Government Bonds are the best investment, even if the return is small?. As the years gather you will meet some pretty good salesmen who will try to sell you everything from stock in a copper or gold mine to some patent that they will tell you will bring you millions, but remember that for every dollar made that way, millions have been lost. I have been taken by the same gentry but that was perhaps because I had to learn from experience?.
“To Kell, I want to say that if there is anything to this Mendelian theory, you will probably like to bet on a horse or indulge in other forms of gambling ? so if you do, never bet what you cannot afford to lose and if you are a loser, don’t plunge to try to recoup. That is wherein the danger lies. ‘There will be another deal, my son, and after that, another one.’?
“In this document I have given you things, but if I had the choice to give you worldly goods or character, I would give you character. The reason I say this is that with character you will get worldly goods, because character is loyalty, honesty, ability, sportsmanship, and, I hope, a sense of humor.”
The document goes on at some length in that vein, and it does get around to explaining how all of Mr. Kelly’s property would be distributed. I don’t recommend writing your own will in this manner, but writing an ethical will that reflects your personality and philosophy can be a good gift for your loved ones.
An ethical will gives you a chance at a little bit of immortality. You might be remembered for what is actually important to you instead of the random memories of others. For more on ethical wills, read The Rich Die Richer and You Can Too by William D. Zabel.