September 2005
Volume 2, Number 1
Table of Contents

Reintroducing The Ethical Will: Expanding the Lawyer’s Toolbox

By Scott E. Friedman and Dr. Alan G. Weinstein

Perhaps the best-known of all legal documents is the will -- the instrument by which individuals direct how and to whom their assets are to be transferred upon their death. Often in consultation with other professionals such as accountants and financial planners, both general practitioners and estate planning specialists devote much or all of their professional time and resources to assisting their clients prepare their will and ancillary documents in contemplation of wisely and efficiently transferring their wealth.

Notwithstanding the often considerable time spent in the estate planning process, too many people fail to even consider, much less plan for, the transfer of wisdom, insight, experience and similarly related intangibles. This failure results in an unnecessary loss of real value to families, friends, and communities. Parents, particularly as they age, find themselves wondering who will offer advice and guidance to their children after their demise. Children who have lost their parents are often left wondering what advice “mom or dad would have given.” The transfer of these intangibles may provide families and friends with a continuity and sense of purpose that traditional wills do not.

Historically, professional advisors have too often neglected the opportunity to counsel their clients with respect to the transfer of wealth which takes the form of “wisdom” and “insight.” The time is now for that omission to be rectified. Lawyers can offer at least a partial solution to the foregoing problem by introducing their clients to an ancient, but little-publicized, tool known as an “ethical will.”

What is an Ethical Will?

Since it is a uniquely personal document, it is difficult to precisely define what is meant by the term “ethical will.” As a general proposition, it is a letter that is intended to share important values, lessons, and blessings to loved ones. Ethical wills are sometimes used to ask for forgiveness or to forgive someone else. An ethical will might even contain burial instructions or, as one of the authors recently experienced, instructions to forego a traditional burial service in lieu of a party. It can be written to family members, friends, and even organizations.

While some ethical wills continue to be transmitted orally, the modern ethical will is most typically prepared as a written letter. With the wide access to new forms of technology, ethical wills are now being prepared on CDs and DVDs, with all the accompanying bells and whistles (video clips, photographs, sound bites, music, etc.) It is even possible to engage production companies for those interested in a preparing a professional quality video. Whether simply written on the back of a napkin, or recorded with the most advanced technology, an ethical will represents one of the surest tools available to transfer wisdom, values and expressions of feelings.

Contents of An Ethical Will.

Mostly conceived of as a vehicle for expressing deeply held personal or family values, visions and beliefs gleaned from a lifetime of learning and experiences, there is almost no limit to the amount or type of information that can be included in an ethical will. Contents might include insights into happiness, business success, dealing with difficult times and difficult people. Historical information that might otherwise be forever lost can be transmitted. For example, the circumstance surrounding meeting a spouse, delivery of a child, overcoming adversity, or the memories from a particular trip or moment of time. Recounting major lifetime decisions, and the purposes underlying those decisions, might also be included. Recommendations about favorite books, songs or movies might be important for some to share for posterity.

In helping our clients prepare their ethical wills, we ask them consider a wide variety of subjects for possible inclusion. For example, in addition to the subjects referred to in the preceding paragraph, we ask our clients to consider including thoughts on the following:

  1. A statement of values and examples of how they were used to help make difficult decisions;
  2. Lessons from loved ones, including parents, spouse, children and friends;
  3. Hopes for the future;
  4. Advice;
  5. Important events in life;
  6. Expressions of love, gratitude, appreciation, and forgiveness;
  7. Favorite books, movies, songs, quotations, and places to visit.

We have found that those who take the time to prepare an ethical will not only discover a unique way to share important gifts with their loved ones but, along the way, they also learn something very important about themselves in the process. The experience of working on the ethical will has, in our experience, been a universally positive emotional experience for our clients, providing an often unexpected sense of clarity (as to what is most important to a person) as well as a sense of “completion,” particularly as a parent.

Adjunct to a succession plan

The pressing need for a more holistic approach to estate planning finds particular relevance with respect to family owned businesses. The unique challenges facing family businesses are as well known as their high statistical failure rate. Many attorneys have watched helplessly as their family business clients unravel and implode following the demise of their founder. In the storm of controversy and resulting despair, the refrain among survivors is as predictable as the sun rising in the east: “What would Dad [Mom] have wanted?” Without the benefit of clear guidance, each child freely interprets the wishes of the deceased parent. As a result, offspring often bicker and seek to promote their own self-interest, to the detriment of the family business and family relationships.

In contemplating the scale and variety of intra-family conflict, we have come to the conclusion that many such conflicts are, in part, attributable to the death of a leader who had not thought to clearly transfer his or her intentions, wishes and wisdom to the surviving family members. Lacking direction and the benefits gleaned from a legacy of insight and wishes passed on by the patriarch or matriarch, surviving children often become absorbed in the negative emotions of selfishness, resentment and jealousy, which all inevitably leads to trouble for the business.

While practitioners have become increasingly aware of a number of strategies to assist families in business together (e.g. family council, code of conduct, family constitution, etc.), an ethical will is a complimentary tool that, in conjunction with other strategies, can play a role in intentionally seeking to create and reinforce a higher level of cooperation and trust among family or group members who often struggle in the vacuum created by a leader’s passing.

While traditional estate or succession plans might detail the mechanics pursuant to which ownership interests in a business are transferred, an ethical will can explain why the interests are being transferred in a particular way. The ethical will could also outline how its author hopes future decisions regarding the company’s operations might be made in order to build collaboration and family unity. In short, an ethical will can be used by a senior member of the family business who seeks to (1) share his or her intentions with regard to leadership, succession, ownership and governance of the family business; and (2) provide a moral compass that permits the leader to transmit his or her insights and wisdom to the next generation.

Preparation tips

While there is no right or wrong way to prepare an ethical will, we offer a few recommendations based on our experiences. Traditionally, an ethical will is provided to its intended recipients upon the author’s death. We believe a better approach is to review the document as a family while the author is still alive. This creates a better learning opportunity for the beneficiaries, who can ask questions and gain a sense of clarity and understanding.

As is done with traditional wills, it can be useful to update and edit the ethical will and perhaps add to it over the years as you continue to clarify your thoughts, knowledge and insight. Ethical wills can be used throughout life to help clarify values and guiding principles: in a sense, something akin to an “ethical statement” (or statement of core values and principles). Such statements might be helpful to couples as they enter into marriage, to children upon the divorce of their parents, or at any other point where one feels inspired to share insight, experience and wisdom.

Consider using communication options such as videotape, CD or DVD. A statement that captures not just your words, but also your tone, emotions and other intangibles, can be extremely helpful to your beneficiaries. If your client likes to write poetry or songs, encourage him or her to include a poem, or lyrics of a song, in their ethical will. If an ethical will is written, consider using archival paper to ensure long term survival.

Finally, we note that an ethical will, although potentially more valuable in many respects than a traditional will, should not be considered a legally enforceable instrument. If there are particular points that an author would like to make enforceable, such as a succession plan in a family business, include those points in other documents such as a legal will or shareholders agreement.

Sharing your wisdom

A parent’s insight, knowledge and wisdom are the most important assets they can transfer to a child. Yet in the traditional will, lawyers and their clients traditionally limit their focus to how money and tangible assets can be given away. The ethical will is a wonderful tool that all lawyers should become aware of and use in their professional practice to help their clients share insight and wisdom with children, friends and favorite organizations.

Scott E. Friedman, a managing partner at Lippes Mathias Wexler Friedman LLP, a law firm in Buffalo, N.Y., has written several books and numerous articles on family business. Alan G. Weinstein, Ph.D., holds a professorship in management and entrepreneurship at the Wehle School of Business, Canisius College, Buffalo, N.Y.

 

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