Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Post-ATRA Estate Planning, Part IV: Planning for Married Couples after ATRA (January 2014). The full column may be downloaded by clicking the following link:  Saret_MAG_01-14.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Post-ATRA Estate Planning, Part III: Planning for Married Couples after ATRA (November 2013). The full column may be downloaded by clicking the following link: Saret_MAG_11-13.pdf
Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Post-ATRA Estate Planning, Part II: Estate Tax Portability. The full column may be downloaded by clicking the following link:  Saret_MAG_09-13-4 copy.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Post-ATRA Estate Planning, Part I: Key Transfer Tax Provisions of the American Tax Relief Act of 2012 (July 2013).  The full column may be downloaded by clicking the following link:  Saret_MAG_07-13.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: The 3.8-Percent Medicare Contribution Proposed Regulations-- Part II.  The full column may be downloaded by clicking the following link: Saret_MAG_05-13-1 copy.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: The 3.8-Percent Medicare Contribution Proposed Regulations-- Part I.  The full column may be downloaded by clicking the following link: MAG_03-13_Saret.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: The 3.8-Percent Medicare Contribution Tax (January 2013).  The full column may be downloaded by clicking the following link:  MAG_01-13_Saret.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Transfer of Family Homes--Part II (November 2012).  The full column may be downloaded by clicking the following link: Saret_MAG_11-12.pdf

Transfers of Family Homes

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Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Transfers of Family Homes (September 2012).  The full column may be downloaded by clicking the following link: Saret_MAG_09-12.pdf

Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Easy Ways to Use the $5 Million Estate and Gift Tax Exemption While You Still Can (July 2012).  The full column may be downloaded by clicking the following link:
Saret_MAG_07-12.pdf
Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Retirement Benefits in the Context of Estate Planning--Part III: Income Taxation of Qualified Rollovers; Current Estate and Gift Tax Developments
 (May 2012).  The full column may be downloaded by clicking the following link:  Saret_MAG_05-12.pdf

Estate Tax Planning During 2012

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Lewis Saret authored the following column, published in CCH Taxes - The Tax Magazine, The Estate Planner: Estate Planning During 2012 (March 2012).  The full column may be downloaded by clicking the following link: Saret_MAG_03-12.pdf

Lewis Saret authored the second in a series of columns, published in CCH Taxes - The Tax Magazine, The Estate Planner: Retirement Benefits in the Context of Estate Planning--Part II: Income Taxation of Retirement Benefits, which discusses the income taxation of retirement benefits with associated basis.  The full column may be downloaded by clicking the following link: Saret Article

Lewis Saret authored the first in a series of columns, published in CCH Taxes - The Tax Magazine, The Estate Planner: Retirement Benefits in the Context of Estate Planning--Part I: Minimum Required Distributions.  The full column may be downloaded by clicking the following link:  Saret_MAG_11-11.pdf

Ethical Wills: Adding Values to the Estate Plan

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Published in

The Washington, D.C. Estate Planning Council

Estate Planning Newsletter

Issue No. 43, Fall-Winter 2005

By

Lewis D. Solomon

Theodore Rinehard Professor of Business Law

The George Washington University Law School

And

Lewis J. Saret

Moore & Bruce, LLP

Generally

We are all familiar with testamentary devices such as Wills and Trusts. However, few are familiar with ethical wills, which deal with our clients' values. While clients come to advisors primarily to help them transfer property between generations, many also are concerned about the legacy they leave to their loved ones in the form of the values passed on, the meaning of their lives and the love they feel for their family members. These clients feel the need to address this concern, but do not know where to turn. We have found that such clients are not only receptive to learning about ethical wills, but in fact grateful. By exposing clients to ethical wills, you will satisfy your clients' needs, earn their gratitude and feel increased professional satisfaction.

What do ethical wills accomplish and what are their benefits?

Ethical wills are really not wills at all. They are a very personal form of communication, often in the form of a letter but sometimes in other forms, such as video or audio recordings, from individuals to their loved ones telling the recipient what they would say if they were alive. Authors of ethical wills often intend for their ethical wills to share their values, important life lessons, wisdom and/or family history with loved ones. They also often use ethical wills to express their love and affection, and sometimes to ask for forgiveness.

The first ethical will is generally attributed to Jacob, in Genesis, chapter 49, when Jacob gathers his sons around him to tell them how to live. This is an example of an oral ethical will. Other examples include the New Testament, where Jesus gives his parting blessings and advice to his loyal followers, and Hamlet, where Polonius gives such sage advice to his son, Laertes, as "Give every man your ear, but few thy voice... (and) This above all: to thine own self be true."

While still rare when compared to legal wills, the interest in ethical wills has significantly increased in recent years. We believe this reflects several factors, including an aging population coming to grips with its own mortality, increasing affluence in our society which allows for greater self-reflection and a general societal shift over the past thirty years to more conservative values.

Among other possible things, ethical wills may do the following:

  • Help instill values in children or other family members by describing the author's values and what he or she hopes the recipient also will come to value. Parents with newborn or young children often find ethical wills appealing for this reason, particularly when they engage in estate planning and contemplate the possible impact of death on their newborn child.
  • Transfer wisdom from one generation to the next by imparting important life lessons to family members, which would otherwise be permanently lost upon the author's death.
  • Pass on personal reflections, and personal and family history to children and family members. Often, when children experience the death of a parent, in addition to the acute sense of loss, they often experience a great deal of frustration from not being able to learn more about their parent(s) and ancestors. Ethical wills can mitigate this by providing personal biographical information.
  • Convey the love and affection of the author. In a sense, the ethical will serves as a love letter to spouses, children or others. Legal wills rarely convey such emotions to the testator's loved ones, and without an ethical will or other form of communication, no other vehicle does this. In this regard, an ethical will is a beautiful gift to the author's loved ones.
  • Help the author's loved ones remember him or her after the author is gone.

Ethical wills also have significant incidental benefits. Writing an ethical will forces the author to articulate his or her values. This is extremely beneficial where the author desires to implement an overall plan to transfer values along with human and intellectual capital between generations, which is sometimes referred to as a values based estate plan. To illustrate, articulating the senior family members' values greatly facilitates the creation of a family mission statement, implementation of enhanced family rituals, creation of incentive trusts and a more formal structure for family philanthropy, each of which may be included in such a plan.

In addition, the self-reflection implicit in the preparation of an ethical will may also cause authors to re-examine their lives and in some cases cause them to change the direction of their lives to one more aligned with their personal values and objectives.

As authors gain greater identification with their values and beliefs, they may wish to share the thoughts and words expressed in their ethical wills with other family members during lifetime rather than after or near death. Under the right circumstances, this can bring family members closer together and greatly enhance the education of younger family members.

What types of clients are ethical wills appropriate for?

While an ethical will can benefit anyone, certain types of clients tend to be more interested in them than others. One such group consists of parents with young or newborn children. The birth of a child begins a thought process, which sooner or later causes new parents to focus on who will raise their child if something happens to them. A named guardian is only a substitute, often a poor to fair substitute at best, for the real parent. An ethical will may give new parents some degree of comfort that their child will learn and understand their values.

Another such group consists of terminal patients. Terminal illness forces an individual to come to grips with his or her own mortality. One common result of this is a desire to find meaning in one's life. An ethical will may help in this situation.

Ethical wills are often important to individuals with a strong religious affinity as such individuals typically want their children to understand their religious beliefs. An ethical will may assist with this effort by articulating and explaining the author's religious beliefs and why they are important to the author.

Owners of family businesses may also be attracted to the concept of an ethical will. Family businesses often serve as the glue that binds a family together. In such cases, this results in a focus on the values and other characteristics of the family itself, which distinguish that family from other families. In such an environment, ethical wills not only are greatly appreciated, but also often assist with family business succession issues and multi-generational family plans.

Finally, other life changes that may prompt an interest in ethical wills include the following:

  • Marriage
  • Birth
  • Remarriage
  • Marital turmoil
  • Divorce
  • Geographic move
  • Death of a spouse
  • Death of a parent
  • Change of career
  • Retirement
  • Health challenge

How to write an ethical will

Each ethical will is a unique, highly personal document. Having said this, many ethical wills follow a similar organizational structure. Individuals who want to write an ethical will may use the following outline as a guide. Specifically, they may pick and choose those headings that are important to them and ignore those which are not.

  1. Opening. Determine to whom the author is directing the ethical will. This can be more than one person or alternatively the author can write more than one ethical will. The opening may also discuss the author's reasons for writing an ethical will.
  2. Topics to be discussed. The author may want to consider discussing one or more of the following topics in his or her ethical will:
    1. The formative events in the author's life
    2. The world in which the author grew up
    3. Important life lessons learned by the author
    4. Description of important people in the author's life
    5. Explanation of decisions made by the author in his or her legal Will and other testamentary documents
    6. The philanthropic causes that are important to the author
    7. Mistakes that the author has made
    8. The author's reflections on his or her life, how he or she feels about events in the author's life and what the author has accomplished
    9. Expressions of love and gratitude
    10. Discussion of values that are important to the author
  3. Hopes for the future. The author may wish to share his or her hopes for the future. Often this relates to the author's hopes for the future with respect to the recipient of the ethical will and may build off of topics discussed as part of the above discussion.
  4. Concluding thoughts. When authors are tempted to make negative comments, they should bear in mind that once they pass away they can never retract the words they use. In addition, such comments may cause significant pain to the recipient. Therefore, all authors of ethical wills should carefully review, self-proof or ask a third party to proof their ethical wills to ensure that they reflect their true intent without causing unintended harm

    In terms of format, ethical wills were originally made orally. Subsequently, written ethical wills became common and this is the predominant form today. However, audio and video recorded ethical wills are becoming increasingly popular. These offer the benefits of capturing the author's tone, emotions and other intangibles. Unfortunately, however, these forms of ethical wills are subject to technological change and less permanency. Therefore, when using video or audio ethical wills, authors should prepare a written manuscript. All written ethical wills should be written on acid free archival paper.

Conclusion

We firmly believe that ethical wills add substantial value to the estate planning process for clients. They are a beautiful gift from the author to the recipient of the ethical will. In many cases, they convert a horrible chore to a labor of love. For estate planners, suggesting an ethical will may result in a closer bond with clients, greater client satisfaction and increased personal and professional satisfaction from helping clients transfer values and wisdom between generations.

Additional Resources

Books

Barry K. Baines, Ethical Wills: Putting Your Values on Paper (2002).

Barry K. Baines, The Ethical Will Writing Guide Workbook (2001).

Jack Riemer & Nathaniel Stampfer, So That Your Values Life On - Ethical Wills and How to Prepare Them (2003)

Web Sites

www.ethicalwill.com

www.lifebio.com