“Sometimes an inheritance is more about the legacy than the assets being passed down, and sometimes it's a little bit of both.”
An ethical will, also known as a "legacy letter" or "living legacy," is a document that is often given to family and loved ones, while the writer is still alive to go over matters not covered in the will.
Investment News’ recent article, “Advisers use ethical wills to look beyond client assets,” says that a legacy letter helps the writer explain to younger generations his or her reasons for setting up the will in a certain way and what they hope to accomplish through the estate plan. In writing the letter, the donor is also adding to the probability that his or her wishes will be followed.
Some don’t like the term ethical will, and prefer to call it a legacy letter. However, the purpose is the same. Regardless of what it's called, the ethical will is simply a letter.
It’s not a binding legal document. It is often written to accompany a formal will.
An ethical will can help uncover character assets and the values that a person holds dear. It can explain that what they have to pass on to loved ones can be much more valuable than finances.
These letters are designed to be unique and personal, even if they’re used to clarify how and why an estate is being allocated in a certain way.
The goal of an ethical will is to pass along, in a person’s own words, what they're hoping to accomplish with their estate.
Reference: Investment News (June 19, 2018) “Advisers use ethical wills to look beyond client assets”