Clients are interested in passing on values to heirs but don’t know where to begin. This is a good time for advisors to become familiar with the “Ethical Will.”
When you ask your clients what they’re interested in passing on to their heirs, you probably expect them to talk about their financial assets. After all, we’ve been trained to believe that wealthy individuals are primarily focused on passing on their assets. Surprisingly, that’s not the case.
Age Wave is a company that describes itself as “the nation’s foremost thought leader on issues relating to an aging population.” Founded in 1986 by Ken Dychtwald, a famous demographer, for more than 30 years, the company has been encouraging employers and institutions to reinvent their products, marketing and workforce to capitalize upon our country’s trends in aging.
In 2005, Age Wave, Allianz Life Insurance Company of North America and Harris Interactive conducted the most significant study of intergenerational wealth transfer ever undertaken. In the study, they asked over 2,600 high net worth individuals to define “leaving a legacy.” The study’s results identified the “four pillars of legacy,” as the most important things the respondents wanted to pass on to their heirs. In order of importance the “four pillars of legacy” are:
- Values and life lessons
- Personal possessions of emotional value
- Wishes and directions to be fulfilled, and
- Financial assets and real estate
If your clients are most interested in passing on values and life lessons and you don’t know where to begin the discussion, this is a good time for you to become familiar the “Ethical Will.”
Unlike a legal will that dictates how an individual’s property will be distributed at death, an Ethical Will has no legal standing and it has nothing to do with transferring property at death. Instead, an Ethical Will is the product of an ancient tradition in which the individual shares his or her life story, personal values, blessings and advice with future generations of their family. According to Dr. Barry K. Baines, the author of Ethical Wills, “legal wills bequeath valuables, ethical wills bequeath values.”
We offer two tools to help you with these client conversations: an article titled, “The Ethical Will” and the Ethical Will/Family Legacy Letter Worksheet. The article will give you a more in-depth understanding of an Ethical Will and the worksheet is a tool you can share with your clients to help them answer the questions that will form the foundation of their Ethical Will. In addition to giving your clients the tools to help them create an Ethical Will that will help them share their values, life experiences and beliefs with current and future family generations, you may also want to offer the services of one of your staff members to help your client put their Ethical Will into a narrative form. If you’d like a copy of these resources, then feel free to reach out to us.
This year, instead of just sending your clients a holiday card, give them the priceless gift they really want but don’t know where to find, the gift of legacy.